Panama Inflation

Panama

Panama: Inflation moderates considerably

August 12, 2011

In July, consumer prices added 0.07% over the previous month, below the 0.15% increase observed in June. According to the National Comptroller's Office (Contraloria General de la Republica), the monthly price rise mainly reflected price increases in food and beverages (+0.4% month-on-month). On the other hand, transport prices fell by 0.8% in July. Owing to the subdued monthly price increase and a price spike in the same month last year, annual headline inflation dropped from 6.5% in June to 5.4% in July, declining for the first time since the beginning of this year. That said, the inflation rate remains well above historically low levels. Panama registered an average inflation rate of 1.3% during the 15 years prior to the price surge that commenced in May 2007 and peaked at 10.0% in September 2008. In the country's dollarized economy, authorities lack the freedom to use monetary policy or exchange rate adjustments to reduce inflation.


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