Mar 10 2020

Inflation in Costa Rica

(Updated 3/9/2020)

Latin America has a reputation for 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

Their most up-to-date inflation chart includes the years 2000 to 2016:

Since we moved to Costa Rica in 2009, the country has kept inflation under control; in fact, the inflation rate in 2016 was zero:

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 rose to over $4.25/gallon and is now $4.28/gallon in March 2020). I now drive about 5,000 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.

Simplify-Your-LifeTen or eleven 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 now 73 and Gloria is 63) and “retirees” we wanted to scale down and simplify. Living in “luxury” was never in our DNA. Even now, my monthly Social Security payment is only $1074 and Gloria collects a small pension of $152 so it’s good that we have that outlook, right?

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 keep our legal residency in our adopted country, but we still intend to keep our options open.

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