BRIEFS. economy

Inflation expected to decline next year

david mesa/la prensa

going down: After unprecedented increases this year, Panama’s inflation rate is expected to fall next year. 1116398

The falling price of oil is expected to cut Panama's inflation rate, which reached record levels this year.

Oil prices, which reached $146 per barrel earlier this year, are now hovering around $60 per barrel.With the fall in the price of oil, Panamanian consumers should expect a reduction in the prices of food and other products.

“If fuel continues to decline at the same pace, it is hoped that there will be a reflection of that price drop on the cost of food,” said Jose Ramon Varela, president of the Chamber of Commerce, Industries and Agriculture of Panama. However, he explained that falling prices will not occur immediately, because producers have an inventory of raw materials that they purchased at inflated prices.

“We must wait until farmers have access to cheap raw materials,” Varela said. “So the new prices will be felt later in the production chain.”This phenomenon will occur, Varela thinks, early next year.

“For the first five months of 2009, inflation is expected to drop to 6 percent, and the rest of the year it will move to higher levels than the country has traditionally experienced, but remain below the 2008 record.”