Costa Rica Cost of Living – The Ticos Are hurting!

[custom_script adID=149]

1. Driving around the last few weeks I have noticed a significant decrease in the number of cars on the road. The rising price of gasoline is hurting the Ticos. Gas stations report 15-20% drops in their sales in the first quarter of this year compared to the same period in 2004. Drivers are also changing their habits, switching more to ‘Regular’ unleaded gasoline instead of ‘super.’

And we must remember that because of the rising oil prices, shipping and transportation costs are higher and this means higher prices for just about every product and service.

2. The increase in electricity prices is also going to affect the Tico family bank account. Residential users of the electricity from ICE which covers 40% of the population will be paying 17% more and the other electricity suppliers are rasing their prices by 7.8-17.3% which is the range approved by the Public Utilities Regulatory body (La Autoridad Reguladora de los Servicios Publicos (Aresep)) for the eight companies that distribute energy here. Commercial electricity users will be paying 15.92-24% more for their energy

3. The #1 food for the Ticos is rice! They eat 18.293 metric tons of it each month and the price of rice this year is nearly 14% higher than last year now 321 colones per kilo. (At today’s exchange rate (colones 471:US$1), that’s about 0.68 cents)

[custom_script adID=155]

4. The dramatic 40% rise in coffee prices has also hurt the Ticos. Since last October, coffee has risen from US$82.40 per ‘quintal’ (which is 46 kilos), at the end of October to $118 for coffee with a May delivery.

5. If that’s not enough to worry a poor working class Costa Rican family, there’s the new fiscal plan that is being considered. The big impact of the fiscal plan will be the value added tax (VAT), which will replace the current 13% sales tax.

The Costa Rica Minister of Finance is a friend and his family is an investment client and know that he’s doing the ‘right thing’ for the people and the economy of Costa Rica but it’s going to hurt a little.

This VAT will also affect foreigners living in Costa Rica because this tax will also cover ‘professional’ transactions. For example; when you hire a lawyer, architect, mechanic or other any other ‘professional’, you will be required to pay the VAT in addition to the fees charged for their professional services.

An extra 30% for gasoline, 17% more for electricity, 14% for rice and 40% more for coffee – That all adds up!

Just like everywhere else, the cost of living in Costa Rica is rising and it’s the poor that suffer the most.