Panama Inflation


Panama: Inflation accelerates in May for a fourth consecutive month

June 14, 2011

In May, consumer prices added 0.37% over the previous month, well below the 1.06% increase observed in April. According to the National Comptroller's Office (Contraloria General de la Republica), the monthly price rise reflected an increase in transportation costs (+0.4% month-on-month) due to the rising price of gasoline as well as higher prices for food (+0.4% mom). As a result, annual headline inflation continued to increase and inched up from 6.3% in April to 6.4% in May, reaching its highest level since December 2008 and moving further above historically low inflation levels. Panama registered an average inflation rate of 1.3% in 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 do not have the freedom to use monetary policy or exchange rate adjustments to reduce inflation.


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