www.CostaRicaTicas.com

I was watching the local news the other day and listened to their president of the Costa Rican Central bank talk about inflation. The thing I don't get - is why does he have a job? Why do they even give him air time? Isn't a recent annual uptrend of double digit inflation proof that he needs to be replaced??? What is wrong with this government???

I speak to locals about this and they just seem to accept 12-14% inflation as normal. Are their wages increasing by this percentage every year? Hell no!!!! So, how can they accept this????

All he needs to do is ask for help. Because he doesn't understand economics. The simple and popular solution is to raise to federal loan rate from the central bank to private banks. Then, stop printing so much phucking money to pay off debts.

The last time I was in Automercado, I spent $50 for two days worth of food and drink. How can the locals afford this? Given the average wage in this country, how does a local subsist on anything but rice and beans?

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http://TipsCostaRica.com for pratical advice on living in Costa Rica.
In order to write about life, first you must live it! - E. Hemingway.

This is a topic I always warm to. You answered your own question when you said : they just seem to accept 12-14% inflation as normal.

It has always been this way in their lifetimes and for them it's normal. If you want to save money, you don't shop at Automercado and the average Ticos don't. Even I have begun to shop at local butcher shops instead. Of course if you have to have Kraft single Velveeta slices, then you have to go to Automercado, but most Ticos don't have that need. Yes prices go up but likewise most wages are set by the govt. and are adjusted to inflation on a yearly basis.

Before we gringos go throwing hand grenades here, we need to take a look at the fiscal policy of our own dear Fatherland, ja? We are currently running outrageous budget and trade deficits and are printing money like crazy to pay for it. If inflation hasn't kicked in full tilt yet, have patience. The USA's position as the (formerly) greatest economy in the world and the use of the dollar as the reserve currency of the world has kept it, to some extent, less exposed to the consequences of a third world economic policy, but make no mistake, the people in the USA who feel they can fight a trillion dollar war AND give away tax cuts have the same mentality as the voters here. Inflation is just another, hidden, tax. The people of Argentina lived for decades with triple digit inflation. Back in the late 70s and early 80s the USA had inflation comparable to what is going on now in Costa Rica. There is a big argument going on as to whether the USA is headed for deflation or inflation, but you can bet it won't be fun for Joe Sixpack.

For all their faults, the Ticos don't have the sense of entitlement we Gringos do. If they have to make do with less, they aren't looking for some straw man to beat up on. They accept that the economy moves in ways they don't comprehend.

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"The only normal people are those you don't know very well." Joe Ancis

While there may be a higher tolerance for inflation in CR and elsewhere in Latin America than in the US, at the moment it's a worldwide problem (mainly due to the demand-driven boom in energy and commodities). Only 6 governments in the Western Hemisphere have a cerntal bank which publishes inflation targets, and (as of the July reports) all 6 are outside of their target range on the high side. The institutions in CR may have their shortcomings, but IMHO they are doing a better job than elsewhere in Latin America (both Venezuela and Argentina have, in the last 3 months, officially discarded or modified their CPI because they didn't like the results).


Osogrande

You can't buy happiness, but you can rent it.

Of course Ticos accept 10 to 14% inflation as this is the normal regular inflation rate. Just like americans accept 3 to 4 %.

I cannot see they can afford things as the wages are so low.

I often wonder how people survive there. The food prices are as high or higher than in the US while salaries are 1/10th of the US.

Basically because they eat differently then the average U.S. resident. For a working class Tico the staple at virtually every meal is rice and beans. Add a small portion of fish or chicken, which I believe are less costly here then in the U.S., and a small salad (where in the states can you buy a head of lettuce for .40 cents or a pound of tomatoes for .60?) and they have a meal they find satisfying. They shop at ferias which are cheaper then super markets or pulperias.

Gringo get a distorted few of food prices because they shop at super markets and buy imported comfort foods from the U.S. For example..
Simple answer is they can not afford it and therefore do not shop there unless they are upper class Ticos and make very comfortable incomes.

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Pura Vida
Only Irish coffee provides in a single glass all four
essential food groups:
alcohol, caffeine, sugar and fat.
Alex Levine

Greengo, are you talking about the country pork restaurant in the mountains south of SJ that has a great view and is near the little coffee house by the bus stop? If so, great eats....

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Providing humanitarian assistance to self employed chicas, one cash grant at a time.

If you are referring to Donde Alcides, AKA Pork Chop Hill, what view?

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Pura Vida
Only Irish coffee provides in a single glass all four
essential food groups:
alcohol, caffeine, sugar and fat.
Alex Levine

ID, actually the view through the windows is not that great, but, the view of the pork cooking station with onions on the grill and the bananas in homey is super But, I will say that the view from the walk 200 meters up the road to the coffee house is nice. The bus ride to and fro SJ is also well worth a buck or so each way.

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Providing humanitarian assistance to self employed chicas, one cash grant at a time.

Chi Trekker....

You need to eat more fruit amigo! Bananas, mangos and pineapples are a fraction of the price in CR...

PHX

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Why settle for just one woman when you can enjoy them all?

Not to mention the chicas might be more apt for repeated CIM if you stick with the pineapples

I'm proud of you guys. Some of you "get it." I really don't know how most Ticos survive either. CR is very expensive.

Let me present you all with an exercize for the mind. Let's say you bake a pie and cut it in to 8 equal pieces. You give out all 8 pieces to the pie with the agreement that those who took the pieces will give you back that piece but must also add 5% to it. Keep in mind, that this is the only pie. No other pie exists. How can that be achieved? How can everyone who took a piece of the pie pay you back?? In simple terms, the extra is called interest, or biblically "usary." Every religion (for what it's worth) condemns "interest" or "usary." In fact, I know that devout Muslims refuse to receive interest from investments. Do some research on "usuary" or "interest." Again, here is a good youtube video. 5 parts.

http://www.youtube.com/watch?v=aYx7jGYeDmA

dapanz1

Thanks for the youtube link - very good series. The series touched on what I have been thinking lately - that is - access to credit for anything other than cars and homes has been a very bad thing.

I'm pleased that the education loan example was in the series, because this is one that has been on my mind above all others lately. Student loans simply enabled universities to go on a spending spree. Tuitions would not have went up if it wasn't for the available loans since if the students can't get loans, they can't pay and so there are no students and no tuition payments. But, with the available loans, it is known that students will simply sign up for more debt. They know that people will do anything to go to college - like the woman in the series.

I don't look out for financial doomsday - just got to roll with what is going on because I can't change it. But, financial doomsday has to be coming... 20 years from now, 30, 40, 50, who knows really. Something big will eventually happen that resets everything. At the point in which everything resets, I'm thinking that only the rich will be hurt since everyone else really will have nothing but IOUs.

In today's world one really has to be prepared to survive handsomely longterm. What I mean by longterm is that there are 30 and 40 somethings out there pretending to be rich with the nice house and the luxury cars, but that lifestyle, if built on debt, eventually bites them in the end.

Dapanz1 - True that Muslims are opposed to interest, however they have a workaround that is really no different than debt/interest, however it lets them sleep at night.

Another thing I'd like to mention is that I don't think products and services are priced according to what they cost to produce <--- this is conventional thinking, I agree.

My belief is that produces and services are priced according to what you are willing to pay. With available credit, people tend to be willing to pay way more so prices increase. Often it isn't about what is being paid in total that people think about, but instead, because of credit, people think about the monthly payment only. If cash had to be forked over, I think people would think longer about how much they are paying and what they choose to purchase.