Panama Inflation August 2022

Panama

Panama: Inflation falls to over one-year low in August

September 15, 2022

Inflation eased to 2.1% in August from July’s 3.5%. August's figure marked the lowest inflation rate since June 2021. A sharp deceleration in price pressures for transport largely explained the reading, following a drop in crude prices in August.



Annual average inflation remained at July's 3.2% in August. Finally, consumer prices fell 1.35% in August over the previous month, a sharper drop than July's 1.24% decrease.

Going ahead, our panelists expect inflation to pick up again by the end of the year. The August print was distorted by a base effect, as is clear from the more marginal change seen in month-on-month inflation. Economic growth—set to be the fastest in Central America this year—should bolster price pressures. That said, inflation is unlikely to return to the over nine-year high seen in June thanks to the government’s price cap on gasoline and diesel, which is to remain in place until January 2023.

Our panelists project that inflation will end 2022 at 3.7%, which is down 1.1 percentage points from last month’s forecast. The panel sees inflation ending 2023 at 2.6%.


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