Panama Inflation


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.

LatinFocus Consensus Forecast panelists expect inflation to reach 3.8% by the end of 2014, which is down 0.1 percentage points from last month’s forecast. For 2015, the panel sees inflation at 3.6%.

Author:, Economist

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Panama Inflation Chart

Panama Inflation July 2014

Note: Annual and monthly variation of consumer price index in %.
Source: National Comptroller’s Office and FocusEconomics calculations.

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