Energy and food prices are rising in Costa Rica.

Though Costa Rica is not the incredibly inexpensive country that many wish and believe it to be, most retirees and area residents find it to be affordable: expats in Costa Rica can easily live with $10/month cell phones, rents below $500 monthly, affordable and fresh food from the Costa Rica ferias (farmers’ markets), and utilities that cost a fraction of what they did “back home.” But as the Costa Rica cost of living rises and the dollar falls, the country is becoming more expensive for its own citizens and recent arrivals.

Food costs are rising around the globe, and Costa Rica is no exception. Starting with rice, which may rise ¢20/kilo, the cost of food in Costa Rica begins its climb. Though the Corporación Arrocera Nacional (National Rice Corporation) has petitioned for the almost-5% increase, many consumers think that the new price is too high for one of Costa Rica’s most popular and necessary staples.

However, a 5% increase in rice costs is peanuts compared to the 23% increase in overall food prices in the last year. Indeed, this rate of increase is double the general price indicator (11.04%), which uses averages to predict general food cost increases, and means that what you bought in 2007 for ¢1,000 will now cost you ¢1,230.

Rising costs will affect everything, even if we see the individual costs as small. A higher price on wheat will increase the costs of pasta and bread, and a higher cost of corn will affect the country’s tortilla industry. And though restaurants are still full, they will increase their food prices in accordance with the market, a move that may make it harder for many families and individuals to eat out.

As we heard last week, not only are our food costs rising, but Costa Rica electricity costs could go up an incredible 75%. The Public Services Regulating Authority is currently reviewing ICE’s request for the increase. The Instituto Costarricense de Electricidad, a government-owned energy monopoly, cites rising costs as the reason for the proposed increase. In order to pay outstanding debts from 2007, and to prepare for the future, the company will need more income.

This week, it was revealed that our electric bills will go up according to consumption. Bills will be divided into three groups: those that use less than 200 kilowatts per month, those that use between 200 and 300 killowatts per month, and those that use more than 300 kilowatts per month. Costa Rica’s poorest residents — presumably those that use less than 200 killowatts monthly — will pay the least, and those who consume the most electricity, more than 300 monthly kilowatts, will likely see an increase of almost 65% on their electricity bill.

With rising costs and the falling dollar, many retired Americans on a fixed income are feeling the pinch. They are joined by many Costa Ricans who live paycheck-to-paycheck using every monthly colon to put food on the table. In addition to these problems, many services and even salaries in Costa Rica are tied to the dollar, leaving companies to figure out how to stabilize their budgets.

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Filed under: Travel on April 4th, 2008