The Economist Intelligence Unit recently released a new Country Report for Costa Rica. This new report, which is available in electronic format through Research and Markets, covers economic activity for the months of January and February 2015. As expected, the highlight of the report is the ongoing inflation, which has been increasing at a very fast clip during the administration of President Luis Guillermo Solis.

 

Here’s the report brief:

 

Consumer prices fell by 0.2% in February, after rising by 0.04% In January. In annual terms, consumer prices rose by 3.5% in February, but these are still well below the 5% target ceiling of the Banco Central de Costa Rica (BCCR, the Central Bank).

 

Food and non-alcoholic beverages posted the largest year-on-year rise (8.2%, compared with 7.3% in January), followed by health (5.9%) and education (5.4%). Alcoholic drinks and cigarettes, and rent and housing, also saw above-average growth. Several sectors posted below-average growth, including rent and housing, household goods, and entertainment. Three sectors posted a year-on-year decline in prices, compared with just one in January. These included transport (down by 4.2%, which is a particularly large drop), communications, and clothing and footwear, where prices have been falling throughout the past year.

 

After remaining above 5% in the second half of last year, annual consumer prices have been within the BCCR target range for two consecutive months, and have fallen from the previous month for the past three consecutive months. Falling oil prices have been the key dampener of inflationary pressure. In addition, there has been greater exchange-rate stability since the second half of last year, following depreciation of the local currency against the US dollar during the first five months of the year. This recently led the BCCR to abandon its exchange-rate band.