Costa Rica's Inflation Rate Lowers in February

Costa Rica's inflation rate fell nearly an entire percentage point in February, as the National Statistics and Census Institute (INEC) reported that consumer prices increased an average of 0.69%.

In January, Costa Rica's inflation rate was 1.63 percent, marking the highest increase in the consumer price index since August 2008.

In February, overall prices for education saw the biggest increase in cost, as expenses associated with attending university, high school, elementary school and preschool increased by more than 5 percent during the month. The price increase associated with education correlates with the return of students to school in early February after the year-end vacation period.

Gasoline prices, and the average price of a casado, a traditional Costa Rican meal, also increased during the month.

In comparison, expenses for entertainment and cultural activities fell by 0.92 percent in February, due to a 5% decrease in tourist packages, and the 4% drop in airline tickets to Costa Rica.

Each month INEC measures the price variations of 292 goods and services to determine the inflation rate. In the first two months of 2010, the accumulated inflation ratewa 2.32% and stands at 5.6% for the last 12 months.

Though the INEC consumer price index is widely regarded as the primary indicator for inflation rate in Costa Rica, the Central Bank of Costa Rica (BCCR) said recently that the INEC should not be considered an exact representation of consumer prices.

“The Consumer Price Index is a good indicator to see the impact (of inflation) on the cost of living,” said Francisco de Paula Gutierrez, the president of the BCCR. “But it is not necessarily a good indicator to see the tendency of inflation as a process of sustained growth of the cost of goods and services in the economy.”

Gutierrez explained that a more accurate measure of overall inflation rate is the “truncated measurements” analysis the BCCR unveiled in January. This analysis looks at a wider sample of products and services, and puts more emphasis on overall alterations in consumer prices, versus the categorized calculations conducted by INEC.

The goal of the BCCR in 2010 is to monitor inflation in order to keep the rate at around 4% in 2010.

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