Panama Inflation


Panama: Inflation accelerates in April for a third consecutive month

May 13, 2011

In April, consumer prices added 1.06% over the previous month, above the already substantial 0.91% increase observed in March. According to the National Comptroller's Office (Contraloria General de la Republica), the monthly price rise reflected an impressive increase in transportation costs (+4.6% month-on-month) due to the rising price of gasoline, affected by the ongoing turmoil in the MENA region. Moreover, prices for food rose by 0.7% over the previous month. As a result, annual headline inflation continued to increase and jumped from 5.5% in March to 6.3% in April, reaching its highest level since December 2008 and moving further above historically low inflation levels. Panama registered an average inflation rate of 1.3% in the 15 years prior to the price surge that commenced in May 2007 and peaked at 10.0% in September 2008. In the country's dollarized economy, authorities do not have the freedom to use monetary policy or exchange rate adjustments to reduce inflation.


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