Costa Rica: Annual consumer prices drop for sixth consecutive month in December and hover at historical low
January 8, 2016
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 improvement 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 also 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 overall downward trend since January as inflationary pressures have remained subdued. The Base Rate, which constitutes the main 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 211 days.