QCOSTARICA — Lower interest rates for personal loans, more money to spend, new jobs and the possibility of making investments with better returns are some of the benefits of reducing inflation, according to experts.
At the end of August, Costa Rica not only reported three consecutive months with a negative index but also recorded the lowest interannual inflation in the last ten years: -3.28%.
“Low inflation is convenient for the economy, since it allows the efficient use of resources, and encourages consumption and economic growth, which in turn facilitates the creation of jobs. Finally, low inflation leads to lower interest rates, which generates better financing conditions,” said Luis Alvarado, economic and stock market analyst at ACOBO Puesto de Bolsa.
According to Alvarado and other financial experts, if thinking about taking out a loan at this time, prudence advises waiting a little longer, since in the coming weeks the Banco Central (Central Bank) will analyze a decrease in the Monetary Policy Rate (MPR) and, with it, an expected drop in interest rates at the banks.
In this sense, experts recommend getting advice to consider the impact of inflation on investments and loans, among other financial instruments.
“At times like these, accurate anticipation of these movements becomes essential. To achieve this, it is imperative to have timely advice that understands both the national and international situation. It is essential to not only evaluate the expected returns of an investment, but also carefully consider future inflation. Beating inflation should be one of the main objectives when making investment decisions,” said Silvia Jiménez, manager at nversiones de Mercado de Valores.
On the other hand, the impact of deflation – that is the technical name when there is negative inflation – may not yet be felt in the family economy, but after a few months, things will begin to improve.
“Economic relief materializes after several months, mainly because prices stop rising and the money is enough for more. For example, in the case of transportation, which is beginning to decline a little in the distribution of goods and services, that is where we must wait a reasonable period of three or four months to feel it in our pockets,” added economic analyst, Daniel Suchar.
Big numbers
osta Rica has been reporting deflation for three consecutive months, which means that goods and services in the canasta básica (basic basket) – which include products such as vegetables, fruits, vegetables, seeds, meats and dairy products, among others – are cheaper according to figures in percentage according to the National Institute of Statistics and Censuses (INEC).
Source: LaRepublica.net
