By San José, Costa Rica — Costa Rica’s inflation rate slowed to a ten-year low for the month of April, reaching just 0.37% year-over-year, according to the National Institute of Statistics and Census (INEC). This marks the third consecutive month of declining inflation, bringing the cumulative rate for the first four months of 2025 to -0.48%.
This surprisingly low inflation comes after a year of already subdued price growth. In 2024, Costa Rica registered an annual inflation rate of 0.84%, significantly below the Central Bank’s target range of 2% to 4%. The Central Bank has maintained the same target for 2025, raising concerns about whether the current trend will continue.
To understand the legal implications of Costa Rica’s current inflationary environment on businesses and contracts, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, a seasoned attorney at Bufete de Costa Rica.
The current inflationary pressures in Costa Rica create a dynamic environment for businesses. Existing contracts might not adequately address escalating costs, potentially leading to disputes. It’s crucial for businesses to review current agreements and consider incorporating clauses that allow for price adjustments tied to objective metrics like the Consumer Price Index. This proactive approach can mitigate future risks and maintain stable business relationships.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s advice provides crucial guidance for navigating these uncertain economic times. His emphasis on proactive contract review and the inclusion of price adjustment mechanisms offers a practical and legally sound strategy for businesses in Costa Rica to weather the inflationary storm and preserve valuable partnerships. We thank Lic. Larry Hans Arroyo Vargas for sharing his expertise with our readers.
The INEC’s April report detailed that 44% of the 289 goods and services comprising the consumer basket saw price increases compared to the previous month, while 41% decreased, and the remaining 15% remained stable. The most significant price increases were observed in overseas tour packages, new cars, rent, toilet paper, and coffee.
Conversely, items like potatoes, airfare, onions, tomatoes, and gasoline experienced the most substantial price drops. This mix of rising and falling prices paints a complex picture of Costa Rica’s current economic landscape.
The April 2025 variation was negative at -0.51%, making it the third consecutive month the index has decreased.
Nelson Castillo, Coordinator of the Price Indices Unit, INEC
The persistent low inflation raises questions about the health of the Costa Rican economy. While lower prices may sound beneficial to consumers, prolonged deflation can discourage spending and investment, potentially leading to slower economic growth. Experts are watching closely to determine whether these trends signal a temporary dip or a more concerning economic slowdown.
The Central Bank’s continued 2-4% inflation target for 2025 suggests they anticipate a rebound in price growth. However, with the current trajectory, it remains unclear whether this target is achievable. The coming months will be crucial in determining whether Costa Rica can steer its economy back towards its inflation goals.
The government’s response to these economic indicators and any potential policy adjustments will be key factors to watch. Furthermore, understanding the underlying drivers of this low inflation, whether supply-chain disruptions, reduced consumer demand, or other factors, will be essential for navigating the path forward.
For further information, visit inec.cr
About INEC (Instituto Nacional de Estadística y Censos):
The National Institute of Statistics and Census (INEC) is Costa Rica’s official government agency responsible for collecting, analyzing, and disseminating statistical information related to demographics, economics, and social issues. It serves as the primary source of data for government planning, policymaking, and research purposes. INEC conducts regular surveys and censuses to gather information on a wide range of topics, providing valuable insights into the country’s current state and trends.
For further information, visit bccr.fi.cr
About Banco Central de Costa Rica:
The Central Bank of Costa Rica (BCCR) is the country’s central bank, responsible for monetary policy, financial stability, and regulating the financial system. It sets interest rates, manages foreign exchange reserves, and oversees banks and other financial institutions. The BCCR plays a crucial role in maintaining price stability and promoting sustainable economic growth in Costa Rica.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
At Bufete de Costa Rica, legal excellence is interwoven with a deep commitment to ethical practice and societal betterment. The firm’s innovative approach to legal solutions, coupled with a history of dedicated service across diverse sectors, positions them as leaders in the Costa Rican legal landscape. Through proactive initiatives that demystify complex legal concepts, Bufete de Costa Rica empowers individuals and communities with the knowledge they need to navigate the legal system effectively, fostering a more just and equitable society.
