Costa Rica’s Annual Inflation Rate Turns Negative, 10 Months After Hitting 12%

(Bloomberg) — Costa Rica’s annual inflation rate turned negative in June after soaring to double digits last year, following a series of rate hikes, falling oil prices and a strong local currency.

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Consumer prices fell 1.04% year-on-year in June, the biggest annual decline since March 2016. Prices rose as much as 12.1% in August 2022.

Most of Costa Rica’s inflation was imported via goods, especially gasoline, Adriana Rodriguez, head of local brokerage Grupo Financiero Acobo, said. Lower oil prices combined with 25% appreciation by the local currency against the US dollar over the past year has eased pressure on consumer prices, she said. Services in Costa Rica haven’t caused much inflation due to weak internal demand with unemployment over 10%, she said.

Costa Rica’s central bank Chief Roger Madrigal said last August that inflation would be transitory and that the bank expected prices to fall this year. The bank raised its monetary policy rate to 9% in 2022 and has reduced it three times since March to 7%.