Manufacturing Industry, Costs and Production

In Costa Rica, since July 2020 the producer price index for the manufacturing sector started to report increases, a situation that could lead to a rise in sales prices and simultaneously to a fall in the quantity of products traded.

Monday, April 5, 2021

Between December 2019 and June 2020, the producer price index for the manufacturing sector (IPP-MAN) reported negative year-on-year variations. This phenomenon was reported in the context of the onset of the health crisis caused by the Covid-19 outbreak.

As of July 2020, the PPI-MAN began to experience a rise that was reflected in positive year-on-year variations, which with the passing of the months were rising and in January and February 2021 climbed to 3.58% and 4.32%, respectively. See official figures.

According to businessmen of the sector, products such as plastic, iron, steel and animal feed, are some of the goods that have been evidenced this upward behavior in their respective price levels.

You may be interested in "Plastics: Regional Purchases Exceed $2.6 Billion"

Pedro Morales, Industrial Policy and SME advisor of the Costa Rican Chamber of Industries, told that "...'these increases represent increases in costs for local production and particularly have a negative impact for those that direct most of their production to the local market, since their income is mainly or exclusively in colones'."

For Morales, the country is "... 'facing a situation that if it continues could, on the one hand, have an upward effect on inflation and, on the other hand, affect the economic reactivation, which, although slow, has been taking place in the last months, in manufacturing activity sectors and in the definitive regime'."

Transferring these cost increases to the prices of their products could mean, for many companies, a reduction in the quantities sold and with it an impact on production, Morales concludes.

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