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 Nacion.com 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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Fifteen months after the beginning of the health and economic crisis, Guatemala, Honduras and Nicaragua are the economies in the region with the highest inflation rates, a behavior that was influenced by increases in fuel and transportation costs.

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Logistics Mismatch Pushing Costs Upward

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Construction: Prices in Nicaragua Increase 8%

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The costs of metals and electricity and lighting, during the fifth month of the year explained the 8% year-on-year rise in prices of construction materials.

The statistics of the Price Index of Construction Materials (IPMC) corresponding to May 2019, specify that a 7.6% year-on-year growth was reported regarding May of the previous year (8.6% in April 2019 and 8.9% in May 2018), indicates the report of the Central Bank of Nicaragua (BCN).

Manufacturing and its Different Realities

July 2019

High operating costs and the contraction of internal consumption are some of the reasons why in Costa Rica manufacturing companies under definitive regime report a decrease in their production, a situation that contrasts with the dynamism of companies in free trade zones.

The latest report on economic activity in the country, compiled by the Central Bank of Costa Rica explains that manufacturing grew 2.3% mainly because the free zone companies maintained a high growth (10.8%), which more than compensated for the decrease in production of the definitive regime (-2.5%).

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