Jun 13 2016

Inflation in Costa Rica

Latin America has a reputation of having high inflation. All in all, I would say that’s an accurate assumption. So let’s take a historical look at Costa Rica’s inflation since 1990.

Previous to the year 2009, inflation in Costa Rica was very high, with some years over 20% (see the graph below).

Costa Rica Inflation Chart Source: https://www.focus-economics.com/country-indicator/costa-rica/inflation

Costa Rica Inflation Chart
Source: https://www.focus-economics.com/country-indicator/costa-rica/inflation

But since we moved to Costa Rica in 2009, the country has kept inflation under control.CRInflation2

So how did inflation affect our cost of living? Although our cost of living in Costa Rica has gone up every year, we haven’t let inflation affect us. We just assume costs are going up about 5% and don’t pay any attention to it, until 2015, when the inflation rate was less than 1%. It’s been a good thing. For instance, the price of gas went down considerably in 2015, to as low as $3.90 a gallon (although in 2016 it’s risen to over $4.25/gallon). I drive about 9,000 miles per year, which is more than most, and a lot for someone living in Costa Rica.

pursestringsOver the years, the greatest uptick in our costs was not caused by inflation, but rather by ourselves. We’ve gradually loosened our purse-strings and spent money a little more easily as our financial position has improved. In light of a 0.8% inflation rate last year, one would think our 2014 to 2015 expenses would be about the same, but like other years, our expenses went up. If you look at our Costa Rica living expenses for the last two years (not including the costs of our travels to other countries), you will see that we spent almost $3,000 more in 2015 than in 2014. This is significantly greater than the less-than-1% inflation rate for 2015.

  • 2014 not including trips = 21,191.79
  • 2015 not including trips = 24,127.97 (an increase of 14%)

Simplify-Your-LifeSix or seven years ago, we were more frugal and cautious about our spending, but today we are likely to buy more freely and just flip the item in our shopping cart. Luckily, Gloria and I are on the same page about money. We both tend to be frugal. It’s just our normal, natural, way of being. We can’t help it. Like many seniors (I’m 69 and Gloria’s 59) and “retirees” we wanted to scale down and simplify. Living in “luxury” was never in our DNA.

We know, for many, the cost of living is the most important consideration regarding living abroad, but for us, even with only a small Social Security check of $922 in 2009, it was not. Therefore, inflation never figured into the math. I guess if inflation returned to the pre-2009 levels, it might be a major consideration, but so far, so good. We’re permanent residents and plan to stay in our adopted country, but we still intend to keep our options open.

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