Q COSTA RICA – This year saw a dip in the prices of fuels and lubricants, as well as other staples like tomatoes, meat, bread, and coffee, which in turn caused a decreased rate of inflation.
The prices of fuels and lubricants, as well as other staples like tomatoes, meat, bread and coffee, declined in the course of this year, resulting in a lower inflation rate.
However, the following items saw an increase in cost: sugar (7.4%), oil (6.4%), flour (2.6%) and oats (2.1%).
Daniel Suchar, an independent economist, commented that the recent decrease in figures is a positive development.
“The drop is good news for the pockets of Costa Ricans, especially after the very high figures that were reported last year and this should be reflected in interest rates,” said Suchar.
Lower inflation has been reflected in lower interest rates, the Central Bank (Banco Central de Costa Rica – BCCR) has been decreasing its monetary policy rate, however, highlighted that there are risks that could cause inflation to increase in the medium term.
The primary risks come from disruptions in supply caused by extreme weather events and hikes in the cost of raw materials.
Inflation has an immediate influence on the choices the monetary authority makes in regard to altering interest rates, as well as a direct correlation to the rate of exchange.
Gerardo Corrales, an economist from Economía Hoy, argued that the Central Bank should not maintain its monetary policy rate at such a high level, given that inflation has been declining for an extended period of time and this can have a detrimental impact on production and overall economic growth.
“I believe that the Central Bank has no reason to continue keeping the monetary policy rate so high since inflation has been falling for months,” said Corrales.
Elizabeth Morales, assistant manager of Coopecaja, commented that “the decrease in inflation could provide Costa Rican families with a period of relief, potentially creating an opportunity to save or pay off debts”.
Experts advise that in order to manage finances effectively, it is necessary to plan ahead and determine how the money will be allocated over the upcoming months. This will ensure that all necessary expenses are taken care of and nothing exceeds the amount of income that is available.