Consumer Prices Extend Deflationary Trend in April

Costa Rica’s consumer prices remained in negative annual territory in April, extending a prolonged deflationary cycle that continues to shape the country’s monetary and consumption outlook.

Data published by the National Institute of Statistics and Census (INEC) showed the Consumer Price Index (CPI) reached 108.06 in April, marginally below March’s 108.11 level. Monthly inflation registered negative 0.04 percent, reversing part of March’s 0.34 percent increase.

On an annual basis, consumer prices fell 1.64 percent compared with April of the previous year, marking the third consecutive month of negative interannual inflation, although the pace of decline moderated from negative 2.73 percent in February and negative 2.09 percent in March.

Deflationary Pressures Persist

The latest figures reinforce a broader trend of subdued domestic price pressures that has persisted despite resilient economic growth and stable labor market conditions.

Costa Rica’s cumulative inflation for the first four months of the year stood at negative 0.89 percent, indicating overall consumer prices have declined since the start of the year.

The moderation in annual deflation suggests price declines may be easing gradually, though inflation remains well below the Central Bank of Costa Rica’s target range.

Economists have pointed to several structural and cyclical factors behind the trend, including:

• a relatively strong colón
• lower imported goods costs
• easing global commodity prices
• contained domestic demand pressures

The stronger local currency has particularly affected imported consumer goods, helping reduce retail prices across several categories while also pressuring exporters and tourism operators that earn revenue in foreign currency.

Monetary Policy Implications

Persistent negative inflation could influence future monetary policy decisions by the Central Bank of Costa Rica, which has shifted toward a more accommodative stance over the past year as inflationary pressures faded.

Lower inflation typically supports consumer purchasing power and financing conditions. However, extended deflation can also weigh on corporate pricing power, business margins, and investment sentiment if consumers delay spending in anticipation of lower prices.

Financial markets and businesses will likely monitor whether inflation stabilizes in the coming quarters as external conditions evolve, particularly regarding exchange rates, oil prices, and global trade dynamics.

Regional Context

Costa Rica’s inflation trajectory contrasts with several Latin American economies that continue to manage elevated consumer price growth following the post pandemic inflation surge.

The country’s relatively rapid disinflation has positioned it among the region’s lowest inflation environments, reinforcing macroeconomic stability while creating new challenges for exporters and sectors sensitive to currency appreciation.

Source: National Institute of Statistics and Census of Costa Rica (INEC).