Costa Rica has gone twelve consecutive months with an inflation whose interannual variation is negative.
This has had repercussion on wage increases, which have remained practically at zero.
Inflation is measured by the Consumer Price Index (CPI), managed by the National Institute of Statistics and Censuses (INEC).
The index is composed of a number of goods and services that make up the basic basket of consumption, with a total of 315 items of higher consumption in Costa Rican households.
However, despite the fact that figures show the cost of living is the same as a year ago, Costa Ricans hold a different opinion.
According to the National University (UNA), this is because not all households consume the same products, and not all households consume the goods and services in the basic basket. Secondly, there are certain goods and services that have increased in price, but the decrease in price of others offsets the effect.
“In the end, on average, the result shows a containment in price levels,” said the UNA Observatory of the Economic and Social Situation.
One of the examples given is that not all families have a car – for those who have a vehicle, gasoline price increases cause a blow to your wallet, and decreases cause a respite.
“This is the same with medicine, whose consumption is higher in the households with elderly people or people with chronic illnesses like diabetes or hypertension,” they added.
It is also possible that some families consume more goods and services each month, i.e. spend more, so that their income reaches them less and less each time.
According to the Observatory of the Economic and Social Situation, debt tends to be one of the major costs that reduce the budget otherwise allocated to household consumption.
“A family that is saving in the main areas of its consumption basket but must use part of its income to pay for housing loans and credit card bills, among others, probably has the perception that prices have not come down, but rather, everything is more expensive because they have little to no savings,” they explained.
Other factors that affect the cost of living that Ticos perceive is that most do not receive the semi-annual adjustments that are made to wages, or they are a product of the current conditions of employment. Income for a significant part of the population has been limited, so although prices remain stable, prices are perceived to be high because income is insufficient.
“The low inflation of recent months does not necessarily imply that the purchasing power of income of all households has increased. In fact, we continue to live in a relatively expensive country which requires an articulation of policies and productive development, an enhancement of human capabilities to the widest reach, that will allow for an increase in sustained labor productivity, and, with it, a substantive improvement in real wages, especially of the lowest level,” they concluded.