Top 10 Costa Rica

Inflation During The Last 12 Months Hit 12.82%

The Instituto Nacional de Estadística y Censos (INEC) – national statistics and census board – said that the accumulated inflation for the last 12 months was 12.82%.

The month with the highest inflation was last month, June, at 1.4%, placing the inflation for the first six months of the year at 6.55%, which is pretty close to the predictions of the Banco Central de Costa Rica (BCCR) – Central Bank – of between 7% and 9% for the entire year.

Francisco de Paula Gutiérrez, president of the Central Bank said that the high inflation rate is mainly due to the rising cost of crude oil and food, which could not have been foreseen.

The Central Bank is expected to revise the economic outlook for the country during this month.

Food costs alone have increased 23.61% over the last year. What that means in real terms is that a family living on an income of ¢100.000 colones a year ago, today needs ¢123.610 colones to stay even.

Gutiérrez said that the items with the greatest increase were eggs, bread and beans, all items making up part of the basic food basket.

The situation, according to the Central Bank head, affects mainly the poor, which have to now dedicate a greater amount of their income to food, which in many cases means spending up to 45% of their income to keep fed.

The Central Bank is expected to apply a restrictive police which can include reducing the amount of cash in circulation to influence a reduction in the demand and to reduce the pressure on internal prices.

For economist William Calvo, the second half of the year should see a reduction in the inflation. Last year prices during the second half of the year shot up, however, according to Calvo, the same is not expected for this year.

Gutiérrez added that it is difficult to predict what is coming, all depending on the price of petroleum and its effect on food prices.