Panama: Inflation continues to fall at start of 2015
February 20, 2015
In January, consumer prices increased 0.06% over the previous month, which contrasted the 0.40% decrease recorded in December. According to the National Comptroller’s Office (Contraloria General de la Republica), the monthly increase in January was driven mainly by higher prices for housing and utilities. Prices for household goods as well as food and beverages were lower in January compared to the previous month. Price pressures in the food and beverages category have been kept in check by the price control system for basic products that President Juan Carlos Varela introduced in July last year.
Annual inflation decreased from 2.6% in December to 0.9% in January, which marked the lowest reading in more than five years. The price control system and falling oil prices are pushing inflation down toward historically-low levels. Due to the country’s dollarized economy, authorities lack the freedom to use monetary policy or exchange rate adjustments to influence inflation.
Author: Carl Kelly, Economist