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Panama Inflation May 2023

Panama: Inflation declines to lowest level since March 2021 in May

Inflation fell to 0.4% in May, following April’s 1.0%. May’s result represented the lowest inflation rate since March 2021. Looking at the details of the release, prices for food and non-alcoholic beverages, and prices for housing and utilities grew at a weaker rate in May. Meanwhile, prices for clothing and footwear contracted at a mostly steady rate compared to the previous month’s reading.

Accordingly, the trend pointed down, with annual average inflation coming in at 2.1% in May (April: 2.4%).

Lastly, consumer prices rose 0.23% in May over the previous month, picking up from April’s 0.18% rise. May’s uptick was the highest reading since January.

Our panel sees inflation increasing from current levels in the coming months due to dynamic domestic activity and the removal of the fuel subsidy from H2 onwards. That said, resurging consumer prices triggering renewed social unrest could prompt the government to maintain fuel subsidies for longer. Additionally, 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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