Costa Rica News – You always here me talking about the increase in the cost of living in Costa Rica and that it is really not that cheap to live here anymore. As I walked into the grocery store this morning to purchase items to make fajitas the cost of normal goods really came into full focus as I paid for the bag of cheese for a little over $5.
For all of you that took economics in college or studied economics at some point in your life you will know what the consumer price index is. For all of you who do not know what it is this is the definition:
A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living.
In essence it is a measure of inflation. (See Video Here) “Price Inflation” is the percentage increase in the price of the basket of products over a specific period of time.
I wondered what this figure was for Costa Rica and what its value had been over the past 10 years. Salaries are supposed to be increased each year by at least the amount of increase of the cost of living in order to keep up the rate of inflation. Let’s take a look at the CPI over the past ten years from January 2003 to December 2012.
In January 2003 this number was at 66.79 in December 2012 that number had increased to 154.99. This is an increase of 88.2 points in the CPI index. In percentage points this is an increase of 132%. This averaged out over the last ten years is equal to a 13.2% increase per year. (Click Here to Check Data)
This means that the actually inflation in Costa Rica was at about 13% per year for the past 10 years. I know that salaries have not increased 132% over the past 10 years, they are about 35% to 40% more than they were back then. Many people will say that the minimum wage requirements have increased over the years in Costa Rica. This is great if companies were actually required to follow the minimum wage laws. Most are not.
Although the cost of living in Costa Rica remains at a level that is not huge rent, food, gasoline, and most life essentials are at the level of the USA. Talk to people that live here and ask what their monthly expenses total. You will find that if you want to retire in Costa Rica or raise a family in Costa Rica it is getting more and more expensive.
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This article could be helpful to costarricences because the CPI/cost of living increase is compared to the relative increase in wages IN COSTA RICA. But, the article is probably of no interest to most costarricences (except possibly collegio students who are writing economics papers) because they already know their wages buy less than in the year 2003 because they have been actually experiencing the trip to the grocery store, and other retail outlets, as they have lived their lives for the last 9 years.
The only somewhat helpful information for people from the U.S.A. who are considering retiring, or otherwise relocating to Costa Rica, is the price of that package of cheese. And, even that information is not too useful because we are not told what kind of cheese it is and we don’t know its weight, either, so that a comparison cannot be made with an equivalent package of cheese in the U.S.A. to see which is more expensive.
Mr. Stevens apparently did do some considerable work by locating relevant statistics and then doing the careful analysis that he then wrote about in this article. So, I do appreciate the work that he did to produce this article. What I am now hoping is that he will have time to possibly, at least for food items, make a list of prices of basic needs items with an adequate description of each of them that could be used to compare with products in the U.S.A. and then publish that in this newspaper. Then people in the U.S.A. could do their homework by comparing the list with what they purchase at the grocery store. The comparison would give the folks in the U.S.A. an idea of what kind of change they might experience upon coming to Costa Rica. It would even be helpful for those who will vacation in Costa Rica for more than just a few days (for example, those who are thinking of obtaining residency status but do not plan to live in Costa Rica for all 12 months of the year).
Another way to accomplish this and produce another article would be for Mr. Stevens to e-mail me the list of foods and their prices in Costa Rica; and then I would travel to stores in my part of the U.S.A. and get prices of equivalent products. I would then e-mail that data I had obtained back to Mr. Stevens and he could write his article in whatever format he felt would be best for the Costa Rican Times.
I did look at a package of grated mozzarella cheese made by Dos Pinos the local brand and then compared it to prices at Walmart in the USA because in the USA Walmart is not a high end store like in Costa Rica.
I can also make assumptions about these things because of those who have just arrived to Costa Rica stating that they have noticed that the price of food is equal if not higher than prices in the USA.
Of course no Costa Ricans would understand this as the school systems in general are terrible in CR, plus they are just looking to be able to live month to month. As long as they have enough for that month they are fine.
You are really going to love by next article. Costa Rica – A House of Cards. This will tackle the fact that the credit system in CR is going to destroy it just like the USA.
There is a ruling class in Costa Rica and they will do anything and everything to stay that way, this is going to make Costa Rica crumble unless some sort of accountability system is put into place to put restraints on those in power.
And, by the way, a while back I did begin shopping at Walmart in the U.S.A. because of their undercutting retail prices at other stores. However, I gradually began to recognize that the lower prices at Walmart were possible because most of their products were of an inferior quality (so they wore out faster if they were clothing, for example) or were *old* models of electronic products, for example. So, I stopped using that store after awhile. All I’m saying is that making a comparison with Walmart products as sold in the U.S. is probably not a test of what is generally sold in the U.S. I am also aware that actual Walmart stores or some of the Walmart sub-division stores (that have other names) are now located in Costa Rica. When I have been in Costa RIca I have not visited any of those stores, but I wonder how the products they sell compare to products other Costa Rican retail stores sell.
What do you think about the new design of the paper?
It is a considerable improvement. The dark blue background was *pretty*, but the new format is a more usual look for top notch on-line news providers. The improved way of completing the follow-up options when making a comment also presents the Times as a more professional communication product. The graphics also seem to have better resolution and the wrap around text looks better than before, also. Maybe it’s just that that dark blue background is no longer there. I’m not sure.
One suggestion: In some cases on-line comment (i.e. reply) submissions I have submitted have never appeared and just disappear from the page as being “awaiting moderation.” I even submitted one reply, twice, with only very minor changes and the same thing happened…it just disappeared.
I have presumed that this purging meant that something in my submission was not in line with your op-ed standards. And, that was O.K. with me as that can happen, however, it would have been a positive action on the part of the Costa Rican Times to have at least sent a *form letter* e-mail response to me that my comment was not considered appropriate, so I would not keep checking and then wondering if the system had just made a technical computing error. If your staff time allowed, it would be even better if the actual reason for not being acceptable would be stated to me in an e-mail reply to my submission so that I could use that comment as a guideline in making further replys.
There is some hope about overuse of credit in the U.S.A., and therefore, possibly the same hope in Costa Rica. Since the U.S. banks had to be helped by the U.S.A. federal government using bailout funds, and so many people lost their homes when they could not meet their monthly house payments, and wage levels stagnated so that the *real* cost of living was severely increasing, and many other financial harships have occurred; a NEW TREND has generally emerged in the U.S. Economic reports show that people are spending more wisely, and paying down their credit card balances, and putting away more money into savings accounts than they have done in decades!
Instead of buying a new house they are fixing any problems with their current house and staying there (if they are lucky enough to be able to meet their mortgage payments). Same thing for cars: car mechanics have experienced a tremendous rise in business because a large percentage of those in the U.S. are not buying a new car every 2 to 3 years, anymore. And, other similar actions are happening with other consumable products. During the total of 3 months that I have spent in Costa Rica during 2006 and 2012, it seems to me that there is a close connection between costarricences and some trends in the U.S. Hopefully, that will translate into the costarricences looking to the U.S. and seeing how its citizens are gradually turning their backs on excessive credit spending.
What I hope is that the Costa Rica government puts into effect a larger yearly property tax so people would actually put the prices of their houses at true market level instead of the over inflated prices that the properties currently are being priced.
However, they will most liekly only be able to do this for properties values over about $150,000 or $200,000 as local Costa Ricans would complain too much.
This will be the straw that breaks the camels back.
I was very surprised when various guys would come to me and say they had a wonderful finca to show me with an excellent house on it for a great price, and then the price turned out to be almost comparable to U.S. prices, AND, since it was way out on an old rutted road and in some cases a stream had to be forded to get to the property, that was also detracting from the so-called value of the property. And, even in places like Palmares de Alajuela where there are some nice U.S. style homes near the cemetery, their prices WERE COMPARABLE, or acutally more expensive per square meter than in similar homes in the U.S. I have the same hope you have about real estate pricing in Costa Rica. ¡Bueno suerte!