How do consumer prices change in Costa Rica? A microdata analysis

This paper analyzes the behavior of individual consumer prices in Costa Rica using more than 887 000 observations of price changes at the product and establishment levels, gathered by the National Institute of Statistics and Census (INEC) for the period August 2006 to December 2013 in order to compute the Consumer Price Index (CPI). The analysis focuses on four dimensions that are not always found together in studies of this nature: frequency, duration, magnitude and synchronization of changes. The characterization of price changes is done for two periods: one of low inflation that began in 2009 and a previous period in which Costa Rica experienced double-digit inflation rates. The analysis shows that the period of low inflation is associated with less frequent price changes, longer duration and lower magnitude in price variation. The evidence for all price changes is more consistent with a state-dependent scheme of price adjustment, although for groups like services and regulated items more empirical support is found for a time-dependent adjustment scheme. ***Resumen: Se presenta un análisis del comportamiento de los precios individuales al consumidor en Costa Rica tomando como base más de 887 mil observaciones de cambio en precio a nivel de producto y establecimiento, recopiladas para el período agosto de 2006 a diciembre de 2013 como parte del proceso de elaboración del Índice de Precios al Consumidor (IPC) del Instituto Nacional de Estadística y Censos (INEC). El análisis se enfocó en cuatro dimensiones que no siempre se encuentran juntas en estudios de esta naturaleza: frecuencia, duración, magnitud y sincronía de los cambios de precios.