San José, Costa Rica, since 1956

Rising Costs Spark Pessimism

IT’S an expensive time to live in Costa Rica, andlower prices don’t appear to be on the way anytimesoon.In recent months, the cost of living has increasedsubstantially, according to recent indicators. Surveysshow citizens are reacting to this shift with widespreadpessimism about the government, the economyand their personal situations.This mood is evident on the streets of the capital.“The legislators and the great ones eat meat, andwe can’t even buy it. We can’t even buy rice,”Benjamin Vindas, 77, a carpenter, told The TicoTimes this week.AT the end of 2004, economic leaders said theyear’s high inflation (13.13%) was mostly caused byleaps in the prices of petroleum and key agriculturalproducts (TT, Jan. 21). However, March statisticsfrom the National Statistics and Census Institute(INEC) show increased costs of a variety of productsthat make up the basic food basket, whichcontains the staple foods consumed byCosta Ricans (see separate box) and is usedto calculate poverty rates.The cost of the basket rose 20.78% inMarch compared to the same month in2004 – from ¢14,406 ($30.72) to ¢17,399($37.10) per person.Therefore, the cost of supporting theaverage Costa Rican family (3.8 people)has risen from ¢54,744 ($116.74) to¢66,119 ($140.97) in the past year.WHILE the price of the food basket hasincreased steadily in this time, with no suddensurges, this is the largest annual increasesince the measure was implemented in 1995.The census institute monitors the prices offoods that surveys show are typical of theCosta Rican diet, in quantities nutritionistsdeem sufficient.Carrots, cabbage, coffee, tomatoes,bananas and white cheese are among thefoods whose prices are responsible for thehigher food basket cost. The cost of onionsand potatoes dropped considerably inrecent months, according to the institute.Various factors, such as rising internationalcoffee prices, caused the increases.Inflation, of course, is also to blame.Central Bank president Francisco de PaulaGutiérrez has already cast doubt upon thebank’s January projections for inflationthis year, which indicated inflation wouldstay at 10% for 2005.PRICES of other goods are rising aswell. The Public Services RegulatoryAuthority (ARESEP) last week approved anincrease in the price of regular unleaded gasby ¢39 ($0.08) per liter, which will go intoeffect Sunday. That’s in addition to a ¢3.5-per-liter gas tax increase by the FinanceMinistry, also set to take effect Sunday. Thecontroversial tax, adjusted for inflationevery three months, generates funds intendedby law for road repair, but used by theFinance Ministry for other expenses – amove criticized by many, including theOmbudsman’s Office (TT, April 1).Soaring gas prices are the reason behinda 40% increase in the purchase of diesel carsin Costa Rica last year, increased interest incompact cars and plans by bus companies toincrease frequency on certain routes in anticipationof an influx of commuters choosingpublic transportation over their cars, thedaily La Nación reported.ACCORDING to the Costa RicanConstruction Chamber (CCC), residentialconstruction costs have risen 32.25%since last year. The increase including residential,commercial and industrial constructionwas 22.08% – to ¢250,647($534.42) per square meter.Increases in the costs of cement (up25.37% since last year), PVC tubing (up21.17%) and electric cable (up 18.73%)caused this increase, INEC data indicate.These increases, in turn, stem from petroleumprices, CCC executive directorRandall Murillo told The Tico Times.“What’s affected us the most is theincrease in fuel prices,” he said, explainingthat the products with skyrocketing pricesall require hydrocarbons for their production.“I’m a little worried. This week theyannounced another ¢40 gas hike, and itseems there will be another soon. This createsa critical situation… for highway construction,which uses a very high percentageof petroleum-based components.”A survey by the firm Unimer, commissionedby La Nación, shows the increasedcost of living has replaced governmentcorruption as the top concern of mostCosta Ricans.Of the 1,415 people Unimer surveyed throughout the country this month, 44% saidtheir income does not cover their costs. Atotal of 21% named the high cost of living asthe country’s greatest problem, up from 19%during Unimer’s survey in November 2004.Only 15% named corruption as their topworry, down from 37% in November – whenthe corruption cases that landed ex-Presidentsin jail were holding the nation in sway.Carpenter Vindas, who says he is strugglingto find work, argues the two problemsgo hand in hand. He blames the country’seconomic problems on misdirected andunderhanded expenditures by theLegislative Assembly and government ministries.“WHILE a worker doesn’t make ¢1.5million ($3,198) per year to buy necessities,the fathers of the country earn ¢1.5 millionper month,” he said. “They’re leeches, feedingoff the blood of the people, and theywant us to be grateful. That’s Costa Rica: ademocracy with a broken ass.”Despite his anger toward the government,he reserved some kind words forPresident Abel Pacheco himself, a distinctionalso drawn by most of the people Unimersurveyed (see separate story). “Pacheco hasvery good intentions,” Vindas added. “He’s acapable man, but there are no means fordevelopment. He wants to provide for us, buthe doesn’t have anything.”Margarita Murillo, 60, said internationalfactors, such as the price of gas or warsabroad, are to blame.“THE high cost of food is the biggestconcern for most Costa Ricans,” she said.“I’ve experienced that too, as a housewife.The money we used to buy with, now doesn’tcover it… But apparently, the Presidenthas his hands tied.The country hasbeen badly managed(in the past), andthere are situationsfrom other countriesthat have affectedthe government here– the price of gas,wars.”A health-careworker who wishedto remain anonymoussaid sheblames the situationlargely onu n d o c u m e n t e dimmigrants from other countries, whichconstitute 80% of the patients she sees.“Costa Rica isn’t a millionaire country,and (the immigrants) benefit,” she said.Regardless of the source of the problem,its effects are certainly being felt.Approximately 73% of those Unimer surveyedsaid the Costa Rican economy isworse today than it was a year ago, with36% adding that their personal economicsituation is worse.“It’s going really badly for me,” saidRodrigo Fonseca, 30, owner of a foodstand on Avenida Central in downtown SanJosé. “Costs go up, salaries don’t.Sometimes there’s enough money foreverything, but with all the prices rising,milk and electricity, it’s very difficult.”

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