Panama’s inflation hits more than 2-year high

Panama’s inflation hits more than 2-year high

Saturday, May 14 2011 @ 06:57 PM EDT
Contributed by: Don Winner
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(Reuters) – Panama consumer prices rose 1.1 percent in April and pushed annual inflation to highs not seen in two years as the isthmus nation tries to control inflation while maintaining strong growth. Consumer prices in Panama rose 1.1 percent in April versus March, bringing the 12-month inflation rate to 6.3 percent, the government statistics agency said on Friday. The 12-month inflation rate was the highest since December 2008, according to government statistics, as high oil prices due to Middle East conflict helped drive prices higher in import-dependent Panama. Transportation prices compared to a month earlier rose 4.6 percent in April on rising fuel prices, said the government. Compared to a year earlier, transportation prices rose 13.6 percent and goods and services climbed 7.8 percent, the government reported. Socially sensitive food and beverage prices rose 6.1 percent. Panamanian Finance Minister Alberto Vallarino has said he hopes annual inflation will be below 5 percent this year. Panama reported average annual inflation of 3.5 percent for 2010. The International Monetary Fund projects Panama’s average inflation for 2011 to be 5 percent but IMF officials are considering increasing the outlook.
“Inflation could be higher,” said Corinne Delechat, an IMF deputy division chief for Central America, referring to the IMF’s current outlook after a conference this month in Panama. Delechat said imported construction materials and wage pressures are factors to be watched. “The tension they have in the labor market, there’s no easy way to resolve that in the short term,” she said, adding that Panamanians traditionally have been accustomed to low inflation before the Central American economy’s recent run of boom years. “Wages will have to increase. It’s a little bit of a culture change,” she added. Accumulated inflation through April was 3.1 percent, the government said.

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