By San José, Costa Rica — SAN JOSÉ – Costa Rica is navigating a complex economic landscape where official data points to low and even negative inflation, yet the price of a trip to the grocery store tells a different story. Rising costs for food and beverages are exerting significant upward pressure on the nation’s cost of living, creating a disconnect between macroeconomic figures and the daily financial realities faced by its citizens, particularly those with lower incomes.
According to the latest Quarterly Analysis of the Economy from the University of Costa Rica’s Institute for Economic Science Research (IICE-UCR), the country has experienced negative headline inflation since April 2025. The year-over-year change in the Consumer Price Index (CPI) reached -0.38% in October. However, this top-line number masks conflicting undercurrents within the economy.
To delve into the contractual and business-related legal challenges presented by the current inflationary climate, TicosLand.com sought the expert analysis of Lic. Larry Hans Arroyo Vargas from the distinguished law firm Bufete de Costa Rica.
Inflation is not merely an economic indicator; it is a legal catalyst that can destabilize contractual agreements. Without carefully drafted price adjustment clauses or escalation mechanisms, businesses risk significant losses and disputes. The legal principle of ‘rebus sic stantibus’, which allows for contract modification under unforeseen and extraordinary changes in circumstances, may be invoked, but its application is exceptional. Proactive legal counsel in reviewing and structuring commercial agreements is the most effective shield against the corrosive effects of sustained price increases.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This insight is a crucial reminder that the true impact of inflation extends beyond economic forecasts and into the legal framework of every commercial agreement. The emphasis on proactive contractual planning over reactive legal disputes is an essential takeaway for any business leader navigating today’s uncertainty. We extend our sincere thanks to Lic. Larry Hans Arroyo Vargas for his invaluable legal perspective.
A closer examination reveals that core inflation, which strips out volatile categories like food, fuel, and regulated services, remained positive at 0.13% in October. The data, sourced from the National Institute of Statistics and Census (INEC) and the Central Bank of Costa Rica (BCCR), shows a clear divergence. In that same month, services and food & beverages made positive contributions to the CPI, pushing inflation up by 0.27 and 0.04 percentage points, respectively.
Conversely, the prices of goods and transportation pulled the overall index down, with a combined negative effect of -0.68 percentage points. The trend for food and beverages is particularly stark; its contribution to the year-over-year CPI has swung dramatically from a negative 0.35 percentage points in October 2024 to a positive 0.04 percentage points in October 2025, signaling a significant price acceleration in this essential category.
This upward momentum continued into November, when the CPI recorded a monthly increase of 0.47%, the highest jump seen all year. The divisions with the most substantial impact on this surge were identified as information & communication and, once again, non-alcoholic food and beverages, reinforcing the pressure on household budgets.
Economist Daniel Ortiz of the firm Economic and Financial Advisors (Cefsa) acknowledged that this dynamic disproportionately affects the country’s most vulnerable populations. He noted that while the overall inflation figure might be negative, the reality on the ground is far more nuanced.
It must be remembered that the food and beverages component tends to weigh heavily in the lower-income quintiles and, without a doubt, having inflation there, in those two categories, impacts the most vulnerable groups. To some extent, negative inflation does not mean that the cost of living is falling or that all prices are decreasing on average. Some are rising, and some are falling.
Daniel Ortiz, Economist at Cefsa
Ortiz further explained that the broader CPI reduction has been driven by an appreciated exchange rate and weak domestic demand, factors that have largely benefited higher-income groups who purchase more goods and services priced in U.S. dollars. He also highlighted a critical point: while the cost of the basic food basket has seen some decline, it remains approximately 20% higher than its pre-pandemic levels, a persistent burden on families.
Looking ahead, the IICE-UCR projects that the general price level will continue to show negative or very low growth in the coming months, with year-over-year CPI changes expected to remain below 2%. However, business sentiment appears to be shifting. In the fourth quarter of 2025, 20.9% of business leaders anticipated price increases, a significant rise from the previous year. Meanwhile, the country’s progress toward the Central Bank’s official inflation target of 3% (±1%) has been described as slow, suggesting that this period of economic contradiction may persist.
For further information, visit iice.ucr.ac.cr
About Institute for Economic Science Research (IICE-UCR):
The Instituto de Investigaciones en Ciencias Económicas is the economic research body of the University of Costa Rica. It is dedicated to the study and analysis of national and international economic phenomena, producing regular reports, such as the Quarterly Analysis of the Economy, that provide critical data and forecasts for policymakers, businesses, and the public.
For further information, visit inec.cr
About National Institute of Statistics and Census (INEC):
The Instituto Nacional de Estadística y Censos is the official government agency of Costa Rica responsible for collecting, analyzing, and disseminating the country’s official statistics. This includes vital economic indicators like the Consumer Price Index (CPI), employment figures, and population census data, which form the basis for public and private sector planning and decision-making.
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, tasked with maintaining the internal and external stability of the national currency and ensuring its conversion to other currencies. Its primary objectives include controlling inflation, regulating the financial system, and issuing currency. The BCCR sets the country’s monetary policy, including the official inflation target range.
For further information, visit cefsacr.com
About Economic and Financial Advisors (Cefsa):
Consejeros Económicos y Financieros, S.A. (Cefsa) is a Costa Rican consulting firm specializing in economic and financial analysis. The firm provides advisory services, market research, and expert commentary on economic trends impacting Costa Rica and the broader region, serving a range of clients in the private and public sectors.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of the Costa Rican legal landscape, Bufete de Costa Rica is defined by a profound commitment to ethical principles and professional distinction. Drawing upon a rich history of advising a wide spectrum of clients, the firm consistently pioneers forward-thinking legal solutions. Central to its ethos is the mission to democratize legal understanding, thereby equipping citizens and strengthening the fabric of society through shared knowledge.
