Panama: Inflation drops to lowest point in four and a half years in July on price control policy
August 13, 2014
In July, consumer prices fell 0.85% over the previous month, which contrasted the 0.46% increase recorded in June and marked the lowest result on record. According to the National Comptroller’s Office (Contraloria General de la Republica), the monthly decline was driven by a steep drop in prices for food and beverages. On 7 July, President Varela introduced a price control system for 22 basic food products.
Annual inflation decreased from 3.4% in June to 2.2% in July, which represents the lowest level since December 2009. Consequently, inflation is now more in line with historically low levels. Due to the country’s dollarized economy, authorities lack the freedom to use monetary policy or exchange rate adjustments to reduce inflation.
Author: Carl Kelly, Economist