(QCOSTARICA) LETTER TO THE EDITOR – Should we be surprised by the study conducted by the A.M. Costa Rica staff, as disclosed in the article on March 7, 2013, showing that prices for food and beverages in Costa Rica are 28% higher than Panamá?
In fact, the study revealed that the difference is even greater for some categories of food or beverages: For example, rice – the price of which is controlled by the government – is 62% higher; chicken thighs are 50% higher; Fresca is 89% higher; Coca Cola is 42% higher; and beer is 92% higher.
These differences may come as a shock to some, but not to those expats who travel and are able to compare. What the study did not tell you, however, is that prices for food and beverages in Costa Rica are higher than in many areas of the United States.
My friends in southern Florida tell me, for example, that many food items cost less in Florida, particularly dairy products and beef and chicken. Even fruits and vegetables produced in Costa Rica and exported to the U.S. can often be found at a lower price in Florida.
Many expats came to Costa Rica not only to enjoy its marvelous climate and natural beauty but also to enjoy a lifestyle that offers a lower cost of living. But creeping inflation has significantly eroded their ability to enjoy a lower cost of living.
They were willing to endure the higher cost of vehicles, household appliances, construction materials and pharmaceuticals (often costing 50% to 100% more than the same item in the U.S), and were even prepared to pay a higher price for gasoline and diesel (the highest, in fact, of any Central American country).
However, they were not prepared to see the land of “pura vida” cost more to eat and drink.
How did this come about?
It happened in some cases because of direct governmental action, such as its control of the price of rice. It has also come about because of government inaction, allowing one or two companies in a particular industry to dominate its market, giving it the ability to determine the price, particularly dairy, chicken, and beef, as well as many beverages.
Who benefits from these high prices? Often, the actual producers of the product do not enjoy the advantage of high prices; instead, it is often a distributor or a retail company which has the ability to control its industry.
The net result is that the consumer – whether a Tico or an expat – pays more and enjoys less. Is it “pura vida,” or is it, regretfully, “pura paja.”
David Jackson
San Jose, Costa Rica and San Francisco, California
Pura mierda.
Nothing will change, as long as the politicians in the country benefit. If they didn’t, they would change it and make competition easier. Why in a country the size of West VA, is there only one Toyota dealership? WVA has more than 10 on a quick count. How about the number of importers of cheese, wine, beer, etc. It’s really scandalous imo. Do I have to leave the country now, or have I somehow insulted someone who will sue me under the also scandalous liable laws ?
We’ve already left for all those reasons. As far as I’m concerned, Costa Rica deserves whatever happens. In my opinion and based on experience, the people are generally passive or passive-agressive and selfish. Almost everything we buy in the US is less expensive than in Costa Rica except maybe manual labor. Certainly that isn’t worth the headaches of staying. The country promotes its eco tourism and how “green” it is. No one mentions that it dumps most of its sewage in the rivers and oceans. The landscape is beautiful, but doesn’t make up for the inherent evils. It is not a Pura Vida country.
After six years of expat life in Costa Rica, we left for many of the same reasons mentioned here. The cost of living is insanely out of hand, electricity (per kwh) is 3x what I pay here in Florida, inept processes are the rule and not the exception, cops and politicians are blatantly corrupt, and quality healthcare sucks. The CAJA is a joke. So for those reasons we left and returned to the States. While I have no regrets for the time we spent in country, my recommendation to anyone thinking that living abroad has to be better than life in the US, DO YOUR DUE DILIGENCE and don’t commit to anything that can’t be undone with two mouse clicks on a computer!.
Thoughtful comments about a real problem, though I’d be interested in more analysis and explanation.
Although government price-setting might be an explanation for some of this, my understanding is that price-setting only happens in a few industries. I think the monopolistic or oligopolistic concentration of some industries explains more of it. This is certainly the case in the beer business, where the local monopoly clearly sets inflated prices, and instead of lowering their prices, works (it seems successfully) to stimulate loyalty to their products by doing things like calling Imperial the national beer and hiring “Pilsen girls” to hang around bars promoting the beer.
More than this, I wonder how much both including the sales tax in the sticker price and the seeming manipulation of the currency exchange rate have on these price differences.
I’m not sure about Panama, but in the US the sticker price of goods is listed before sales tax is added, while in Costa Rica the sales tax is included in the price. Since the sales tax is generally 13%, we would expect most goods in Costa Rica to have a 13% higher sticker price than in the US.
There is also the possibility (though I think likelihood) that the currency exchange rate is off and the colon is artifically over valued. If the colon is over valued by around 15%, which strikes me as a reasonable estimate, and the 13% sales tax is included, we get the 28% price difference the article opens with.
I am not saying that these are the explanations are the others don’t apply, only that it’s a lot easier to agree that prices are too high in Costa Rica than to explain why they are. I’d like to understand the why better.