Panama: Inflation drops to lowest point since late 2009 on price control policy
September 12, 2014
In August, consumer prices increased 0.13% over the previous month, which contrasted the 0.85% decrease recorded in July. The price drop in July, which had marked the lowest result on record, was caused by the price controls system for basic food products that was introduced by President Juan Carlos Varela on 7 July. According to the National Comptroller’s Office (Contraloria General de la Republica), the modest monthly increase in August was driven mainly by higher prices for housing and utilities.
Annual inflation decreased from 2.2% in July to 2.1% in August, 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