Inflation To Hit 14%
This Year And Not 8% As
Forecast in January
The Banco Cental de
Costa Rica (BCCR) -
Central Bank - has
revised its forecast for
this year's inflation to
14% and not the 7% to 9%
forecast in January.
The Central Bank also
revised its forecast for
economic growth, saying
it expects a growth of
only 3.6%, down from the
5.3% it said in January.
In addition, the Central
Bank is estimating that
the national debt will
increase to 8%, up from
the 6.3% it estimated in
January.
The Central Bank said it
would continue with its
restrictive policies,
which will mean an
increase in interest
rates, which is expected
to affect consumers and
the construction sector.
Bank authorities say
that the cost of oil and
food make it difficult
to maintain the
inflation at the average
8% level it forecast at
the beginning of the
year. The explanation
was posted on the
Central Bank's website
last night after it
announced the revised
forecasts.
Between June 2007 and
June 2008, the Food
Price Index rose 24%.
Bank officials say that
food is the single most
important item in
expenditures.
The Central Bank also
said that the inflation
target is also affected
by the higher costs of
public services and
adjustment in salaries,
which produce more
increases.
For the foreign exchange
market, Central Bank
authorities announced no
changes and reiterated
its goal to avoid
"unwanted and excessive
volatilities in the very
short term".
The reduction in the
projected growth in
production is mainly due
to the bad economic
situation faced by the
United States, the
largest buyer of Costa
Rican products and tight
monetary policy applied
by US authorities, to
avoid further inflation.
The Central Bank says it
expects a smaller
increase in available
gross national income,
the income left in the
country after
subtracting the
resources that foreign
companies send to the
exterior and includes
the hike in prices of
imported products which
is higher than those
exported. |
