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The Eroding Purchasing Power: Costa Rica's Economic Struggle

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Wojciech Zylm
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The Eroding Purchasing Power: Costa Rica's Economic Struggle

Costa Rica, known for its lush rainforests and picturesque beaches, is grappling with a different reality. The rising prices and stagnant wages are pushing families to the brink, forcing them to meticulously budget their expenses. Even everyday commodities like a box of shampoo have become a subject of careful contemplation at supermarket checkouts.

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The Eroding Purchasing Power

The Central Bank of Costa Rica (BCCR) paints a grim picture. Salaried workers have witnessed a 6% decrease in their purchasing power from February 2022 to February 2023. In real terms, this implies a person earning a monthly salary of 451,000 Costa Rican Colón falls 27,000 short of the same expenses incurred a year ago.

The root of this erosion in real wages lies in price hikes and inadequate salary adjustments in both public and private sectors. The implications are far-reaching, affecting not only the salaried class but also informal workers and the unemployed, who find it increasingly challenging to meet their basic needs.

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The Struggle at Home

A study from the Observatorio del Desarrollo at the University of Costa Rica reveals the depth of the crisis. Approximately 49.5% of Costa Rican families struggle to cover expenses or endure hardships by month's end. The coping mechanisms are either practicing austerity and abstention or falling into a trap of excessive debt. High-interest credit cards, predatory loans, and in extreme cases, criminal activities, have become a means to an end.

No Clear Solution in Sight

The future seems equally daunting. With no clear plans or ideas to counter this trend, the plight of families may worsen. More families may have to make difficult choices, forgoing even essential items like shampoo. The image of a Costa Rican family calculating their every expense at a supermarket checkout stands as a stark reminder of the country's economic crisis and the struggle of its people.

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