First there was the Big Mac Index, then the Casado Index and now the Arroz con Pollo (Chicken Rice) Index. Costa Rica has no shortage of innovative and highly informal methods of pointing out the numerous shortcomings of the national economy. As previously reported by The Costa Rica Star, our country is not as expensive as the Big Mac Index, created by The Economist, suggests. When it comes to purchasing power parity (PPP) comparison tools, the Casado Index tends to be a better measurement, but what about this new Chicken Rice Index?

The Casado Index was previously explained by The Costa Rica Star a little over a year ago:

Similar to the Big Mac Index published by respected financial news media publication The Economist, the [Census and Statistics Institute] calculates a Casado Index. Next to gallopinto, casado is one of the most popular nutrition staples of Costa Rica. This simple, yet delicious, meal that typically consists of rice, beans, fresh salad, a produce-based stew (picadillo), and a choice of beef, fish, chicken, or pork.

In the last few months, the Casado Index in Costa Rica has been relentlessly rising in tandem with the Consumer Price Index (CPI). Local economists see the Casado Index as being more realistic than the Big Mac Index when it comes to calculating the true impact of inflation on households.

The Chicken Rice Index is a creation of daily tabloid Diario Extra, and it looks at a meal that is commonly found in households across Latin America. Diario Extra did not arbitrarily choose this meal; it actually comes from the narratives of the State of the Nation report on statistics and economics in Costa Rica, which has prompted several news publications to run the headline: Costa Rica is the most expensive country in Latin America by 20 percent.

What Diario Extra has accomplished with its Chicken Rice Index runs opposite to what is known for, which is sensationalism. This novelty index explains that chicken in Costa Rica is more expensive than in Venezuela and Haiti, two nations besieged by destructive inflation, and rice presents a similar situation. However, when looking at average annual inflation rates instead of CPI figures and fancy indices based on delicious meals, we find that Costa Rica has actually reduced inflation from 2009 to 2013. By comparison, Honduras, Nicaragua and Panama have seen annual inflation rates near six percent, and those are two nations with much lower gross domestic product (GDP).

The economists responsible for the State of the Nation report have tried to explain why Costa Rica seems to be a lot more expensive than it really is. This notion is tied to monetary policy applied by the Central Bank over the last few years when the United States dollar was not as strong as it used to be. Things, however, are different now and pressure is mounting on the Central Bank to allow the dollar to float against the colon. Even the IMF supports this idea, but it remains to be seen whether such a move will make sense at a time when unemployment and income inequality are rising.