Panama inflation at lowest level in a decade

INFLATION  in Panama this year is expected to be at its lowest level for a decade, and  expected to be below  one percent.According to analysts, is the result  comes from a series of favorable winds both international and local.

The initial official projections were that inflation for 2015 would be 2.6% On the verge of  year end  some economists are forcasting  that inflation in Panama will close the year below 0.5%, while the Minister of Economy And Finance, Dulcidio De La Guardia, expected to finish “below 1%”.

According to the latest official figures from the Comptroller, the consumer price index remained stable in November, and has grown by .4 percent so far this year.

Five of the index groups showed a slight increase in November — restaurants and hotels, health, food and non-alcoholic beverages, clothing and footwear, and goods and various services — while the other sectors showed no growth or a decline. Those sectors are transport, furniture, communications, alcoholic beverages, recreation and education remained unchanged last month.

Economist Felipe Chapman said that internal and external factors have contributed to the low inflation rate. These include the decline in the price of oil, the strong US dollar and low interest rates, as well as the increase in local food production. Chapman also cited the “healthy” growth of the economy, which is not overheating, reports La Prensa.

Rogelio Alvarado, head of the Economic and Social Analysis Unit of the Ministry of Economy and Finance, said inflation is part of a cycle.

“What is happening now is nothing abnormal. We have to wait to reduce the cycle of inflation,” said Alvarado.

According to the official, the surprising factor is the fall in the price of oil to levels not seen in a decade, which has also prompted a decrease in the cost of raw materials and agricultural products.

“The value of the US dollar has appreciated so that we can buy a lot more cheaply than before,” he said.

Alvarado, as well as other specialists, does not believe that this phenomenon will continue. He believes that the US dollar will eventually stop gaining ground as exports from that country would eventually become too expensive.

“If the environment is maintained, prices should begin rising, but at a pace that is quite low,” Alvarado said.

Chapman believes that in the next few months there will be a price increase in products and services, but that it will be very moderate.