When the bad news gets worse and the poor get poorer
From the Sidlelines
Monday’s forecasts of a hefty hike in gas prices, starting on Saturday, April 9, were true. But the rise was even higher than expected and the $4 (plus) a gallon has arrived, even if you use the "cheaper" 91 octane, with heavy consequences for Panama’s economy.
The price of 95 octane will climb 23 cents, making it $4.23 a gallon in Panama City. In Bocas del Toro it will cost $4.42.
Previous rosy forecasts of three percent inflation switched to 4-5 percent as oil prices climbed. Those forecasts are likely to be revisited with a sustained increase in prices of goods and services.
Alberto Vallarino, Minister of Economy and Finance, acknowledged yesterday that it is clear that it will need to revise the inflation outlook, as well as economic growth.
A pointer of what lies ahead is the price of basic food basket. In February 2011 basic products consumed in Panama was $285.77, up from $271.39.a year ago. And if there’s any money left in your wallet when you have refilled your tank with gas, don’t bet it on prices dropping when oil prices fall. Newton’s law of gravity doesn’t work in Panama’s food outlets.
This means that before the news prices kick in a worker in the capital earning the $416 as minimum wage, has only $131 left to pay other bills.Including increasing prices for electricity and hiked transportation costs
"The imported inflation is beyond our control and therefore the country has some armor to protect the most vulnerable," says Economy and Finance Minister Alberto Vallarino, who refers to the gas tank subsidies and the reduced cost of energy for those consuming less than 500 kilowatts.
The State subsidies have already reached $92.6 million, a blow to public finances and putting pressure on the projected costs of the multiple infrastructure projects rushing ahead from the Metro subway to the $70 million dollar government office tower on Avenida Balboa.
Vallarino said that the Government will monitor not speculate on the price of food.
He might want to visit a supermarket and check out a 37 cents rise in the price of a loaf of bread. It was bread prices help ignite the French Revolution, and Marie Antoinette’s alleged “let them eat cake” aside, helped pave her way to the steps of the guillotine.
For low income workers hard times have arrived and the rise of street demonstrations is likely to follow. But will those driving the gas guzzling monsters around the city, change their habits? Perhaps follow the example of some of the well heeled in first world cities and take public transit, or learn that feet are meant for walking, all helping a cleaner environment and less traffic congestion? Not likely. During the last major gas price escalation in 2008, consumption went up.
Only in Panama.
