Tuesday 29 November 2022

Families spend ¢11,000 more on food for each person, compared to a year before

In many households, minimum wage does not cover the cost of the Basic Basket

Paying the bills

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29 November 2022 - At The Banks - BCCR

Paying the bills

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QCOSTARICA – Families in Costa Rica are going through a complicated reality: the monthly food expense of each member of a household has increased by almost ¢11,000 ( ¢10,916) in the past year.

In September 2021, ¢48,867 monthly was spent for each member of the family for basic food for four weeks. For September 2022, that amount was ¢59,783, for the same purchase.

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For 14 months, the cost of the Canasta Básica Alimentaria (CBA)  – Basic Food Basket, a set of foods and beverages that meet nutritional requirements, whose composition reflects the consumption habits of a reference population – has reported consecutive increases, according to data from the Instituto Nacional de Estadística y Censos (INEC) – the national institute of statistics and censuses.

The peak was recorded in August 2022, when the expense per person rose to ¢60,173.

The behavior coincides with that of interannual inflation, which went from 12.13% in August to 10.37% in September, that is, it slowed down.

The president of the College of Economic Sciences, Ennio Rodríguez, pointed out that this slowdown could give some families “a break”, but others will continue to face difficulties.

“For many households, this respite does not mean that they leave a situation of great vulnerability. The problem continues for those with lower incomes,” he commented.

For the lower income group of the population, the CBA remains at a high amount, compared to the figures of previous quarters.

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In addition, inflation is still far from reaching the target range established by the Banco Central de Costa Rica (BCCR) – Central Bank of Costa Rica – around 3%.

Economist Gerardo Corrales, says the behavior of fuel prices during October and the coming months will be decisive in defining whether the country is approaching more “comfortable” conditions for consumers.

“It would be expected that it would contribute to continue reducing the price index and thereby contain the loss of purchasing power and the increase in the cost of living that has been suffered during the year,” Corrales said.

Many experts are forecasting higher fuel prices in Costa Rica in the coming months, given that the methodology to set fuel prices in the country is typically up to two months of what is happening outside the country, mainly in the United States.

Price behavior

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In the last year, the majority of the prices of the products that make up the Basic Food Basket, according to INEC measurements, have shown upward behavior.

One way to analyze it is by observing the behavior of the prices of these goods, within the monthly measurements of the Consumer Price Index (CPI).

“If the index in a certain period is greater than 100, the prices have increased. If the index level is less than 100, the prices, or the index level, have decreased in relation to the base period (December 2020)”, explained the coordinator of the INEC Price Index Unit, Nelson Castillo.

In general, the cost of food has been increasing compared to a year before, although -in a few cases- the increase has been moderated, especially in the last month.

Screen captures of the graph by El Observador based on INEC figures

The container crisis, the rise in the price of fuel, raw materials and transportation, together with the exchange rate, are the main causes of the increase in the cost of living, in general, and of food, specifically.

Changes in the international dynamics have justified most of the upward or downward movements during 2022.

With notes and graphs from El Observador.

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