By San José, Costa Rica — San José – Costa Rica has earned the dubious distinction of being the most expensive country in Latin America, according to a recent analysis of consumer price data. While the nation sits just behind Uruguay for general expenses, once the high cost of housing is factored in, Costa Rica surges to the top spot, creating significant financial pressure on its residents.
The latest index from the statistical site Numbeo reveals that the estimated monthly expenses for a single person in Costa Rica, excluding rent, reached approximately $800 during 2024. This figure places the country just below Uruguay’s $820. However, when the substantial costs of renting or purchasing a home are included in the calculation, Costa Rica’s ranking climbs to number one in the region, a reality felt by families across the nation.
To delve into the legal and business ramifications that the rising cost of living imposes on contracts and commercial relationships, TicosLand.com sought the analysis of expert lawyer Lic. Larry Hans Arroyo Vargas from the renowned firm Bufete de Costa Rica.
The current inflationary environment puts significant pressure on long-term contracts, such as commercial leases and service agreements. It is crucial for both parties to review clauses related to price adjustments or, in their absence, to seek a renegotiation in good faith based on the principle of unforeseen change of circumstances, to avoid potential litigation and maintain healthy commercial relationships.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This emphasis on proactive communication is a critical takeaway, transforming a potential legal dispute into an opportunity to strengthen commercial relationships amid economic uncertainty. We sincerely thank Lic. Larry Hans Arroyo Vargas for sharing his invaluable legal and business perspective.
The data highlights a growing trend that economists and citizens have observed for years. The high price of local goods and services has even begun to alter lifestyle and travel habits, with many finding it more economical to vacation abroad than within their own borders.
Life in Costa Rica is very expensive if you compare it with the value of similar goods and services in the rest of Latin America and other countries. Costa Ricans prefer to travel abroad because it is much cheaper than doing so internally.
Ricardo Monge, Economist and President of the Academy of Central America
The contrast with other Latin American nations is stark. In Paraguay, for instance, the estimated monthly cost of living is just $412, nearly half of what is required in Costa Rica. Colombia, a popular tourist destination for Costa Ricans, boasts a cost of living that is 39% lower, a fact not lost on travelers returning with stories of affordable shopping and dining.
Costa Rica has a cost of living level very similar to Chile, but we are more expensive than countries like Mexico and Colombia, which is the anecdotal part where we all know someone who has just gone to Colombia and tells us that clothes, shoes, and even eating out at a restaurant are extremely cheap.
Melissa Vega, Economist and Researcher at the Central Bank of Costa Rica (BCCR)
A more detailed study conducted by Vega reveals that Costa Rica’s high prices are not just a regional phenomenon. When compared with member countries of the Organisation for Economic Co-operation and Development (OECD), Costa Rica is more expensive in several key product categories that form the backbone of household spending. These include staples like bread, cereals, milk, cheese, and eggs, as well as personal vehicles, fish, and both alcoholic and non-alcoholic beverages.
There are six product categories where Costa Rica is more expensive… The striking thing about these six categories is that not only are we more expensive than the average of the three Latin American countries I mentioned earlier, but we are also more expensive than the OECD average.
Melissa Vega, Economist and Researcher at the Central Bank of Costa Rica (BCCR)
This financial burden is not distributed equally. For the poorest quintile of the population, essential expenses like food, housing, and transportation consume a staggering 65% of their total household income. This figure drops to 55% for the middle class and 47% for the wealthiest quintile, illustrating how high prices disproportionately impact those with the least financial flexibility. Beyond the OECD comparison, Costa Rica’s prices also exceed its Latin American peers in categories like meat, fruits, vegetables, clothing, public transport, and services at restaurants and hotels.
Experts agree that tackling this issue requires deep, structural reforms rather than simple fixes. The proposed solutions focus on fostering a more competitive market. Recommendations include empowering regulatory bodies and streamlining bureaucratic processes to encourage new businesses.
It’s a multifactorial issue. The solutions come more from the structural side of the economy, that is, how we change our institutions to improve efficiency, facilitate the process of opening a business to generate more competition, and have a somewhat less burdensome tariff structure.
Melissa Vega, Economist and Researcher at the Central Bank of Costa Rica (BCCR)
Economist Ricardo Monge specifically highlighted the need to strengthen the Commission for the Promotion of Competition (Coprocom) with greater financial and human resources. He also noted that current laws exclude several key goods and services from the commission’s oversight, limiting its effectiveness. It is crucial to distinguish the high cost of living from inflation; while Costa Rica currently enjoys low inflation, this simply means the rate of price increases has slowed. The absolute cost of goods and services, as the data shows, remains exceptionally high.
For further information, visit numbeo.com
About Numbeo:
Numbeo is a global crowd-sourced database of reported consumer prices, perceived crime rates, quality of health care, and other statistics. It provides a comprehensive analysis of the cost of living and quality of life in cities and countries worldwide, allowing for easy comparison of various economic and social indicators.
For further information, visit academiaca.or.cr
About Academy of Central America:
The Academia de Centroamérica is a private, non-profit organization based in Costa Rica dedicated to the research and analysis of public policy. It focuses on economic and social development in Central America, promoting debate and providing data-driven insights to foster sustainable growth and institutional improvement in the region.
For further information, visit bccr.fi.cr
About Central Bank of Costa Rica (BCCR):
The Banco Central de Costa Rica is the nation’s central bank, responsible for maintaining the internal and external stability of the national currency and ensuring its conversion to other currencies. It plays a crucial role in the country’s economic policy, managing monetary policy, supervising the financial system, and publishing key economic data and research.
For further information, visit oecd.org
About Organisation for Economic Co-operation and Development (OECD):
The OECD is an international organization that works to build better policies for better lives. With 38 member countries, its mission is to promote policies that will improve the economic and social well-being of people around the world. It provides a forum in which governments can work together to share experiences and seek solutions to common problems.
For further information, visit coprocom.go.cr
About Commission for the Promotion of Competition (Coprocom):
Coprocom is the Costa Rican governmental body tasked with promoting and defending competition and free market access. The commission investigates and sanctions anti-competitive practices, such as monopolies and cartels, and reviews mergers and acquisitions to prevent market concentration that could harm consumers.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a cornerstone of the legal community, Bufete de Costa Rica is built upon a foundation of uncompromising standards and ethical practice. The firm distinguishes itself by merging a rich history of client advocacy with forward-thinking solutions, consistently pushing the boundaries of legal thought. Beyond its professional services, it is deeply invested in strengthening society through legal literacy, driven by a core belief in creating a more knowledgeable and empowered citizenry.
