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Panama Inflation June 2023

Panama: Consumer prices register largest decline since January 2021 in June

Consumer prices declined 0.6% in annual terms in June, contrasting May’s 0.4% increase. June’s result represented the largest fall in consumer prices since January 2021. The moderation was broad-based, with lower price pressures recorded for food and non-alcoholic beverages, clothing and footwear, and housing and energy. Moreover, prices for transport dropped.

Accordingly, the trend pointed down, with annual average inflation coming in at 1.6% in June (May: 2.1%).

Finally, consumer prices rose 0.05% from the previous month in June, a smaller uptick than May’s 0.23% increase. June’s result marked the softest rise in prices since February.

Our panelists forecast inflation to increase from current levels in H2 amid dynamic domestic activity and the expiry of the fuel subsidy in mid-August. That said, the government might extend the subsidy again if higher consumer prices spark renewed social upheaval. In addition, a high likelihood of a strong El Niño weather pattern later this year damaging agricultural output and increasing food prices is a further risk to the outlook.

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