Americas > Central America > Costa Rica > Costa Rica Annual consumer prices drop for sixth consecutive month in December and hover at historical low

Costa Rica: Costa Rica Annual consumer prices drop for sixth consecutive month in December and hover at historical low

2016/01/16

Consumer prices increased 0.19% in December over the previous month, which contrasted November’s 0.01% decrease. According to the Statistical Institute, the print reflected an increase in half of the twelve components of the index, with food and non-alcoholic beverages recording the strongest rise.

Consumer prices fell 0.8% in annual terms in December, which marked an development from November’s 1.2% drop and the sixth consecutive monthly decline. The six consecutive drops in annual consumer prices not only reflect subdued prices for commodities, but as well methodological changes in the calculation of the price index as the Statistical Institute recently changed the base month to June 2015. Meanwhile, annual average inflation dipped down from 1.3% in November to 0.8% in December and marked the lowest reading on record.

On 11 January, the Central Bank decided to leave the Base Rate unchanged at 5.95%. The rate has followed an in general downward trend since January as inflationary pressures have remained subdued. The Base Rate, which constitutes the major reference rate for loans and investments, is calculated weekly by the Central Bank as a weighted average of the rates given for deposits by financial institutions for maturities of between 150 and 210 days.
FocusEconomics panelists see inflation ending 2016 at 2.8%, which is unchanged from last month's estimate. In 2017, the panel sees year-end inflation at 4.2%.

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