economy

Inflation increase slows

According to the consumer price index (CPI) published yesterday by the General Accounting Office, goods and services in Panama rose 9.5 percent in October compared to the same month of 2007.

The big news in the report, however, was the gas prices were no longer driving the increase. And the rate of inflation dropped by .5 percent as compared to September, when prices had increased by 10 percent.

Fuel prices fell by 15.4 percent from September to October, reflecting a substantial drop in the price of oil on worldwide markets.

Earlier this year, rising gas prices had been the primary cause of double-digit inflation in the country, with prices increasing by as much as 15 percent in some months as compared to the previous year.

Food prices are now driving Panama’s inflation rate, with prices increasing 15.6 percent in October as compared to the same period in the previous year. The increase of transportation, which includes fuel prices, was 6.8 percent.

“Unlike the price of oil, the price of food has not stopped climbing,” said Ernesto Bazán, general manager of the risk rating firm Equilibrium, which is associated with Moody’s.

Bazán said that inflation will reach double digits at the close of 2008, which is in line with estimates from the Ministry of Economy and Finance, which recently increased its inflation forecast to 10 percent.

Most analysts think that the country’s inflation rates will drop to more manageable levels next year.