Panamanians see purchasing power decline thanks to inflation

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By Marco Echevarria

Dollar continues to lose value for Panamanians

With the elimination of subsidies and the increase in items such as electricity, what is expected is that the cost of living will increase this year.

The announcement that inflation fell last year is accompanied by an undeniable fact, which is that the purchasing power of Panamanian continued to decline.

For the third consecutive year, this indicator continues to fall to 91 cents per dollar in 2023.

This means that a dollar in 2013, the year that was used as a basis by the National Institute of Statistics and Census (Inec), today yields only 91 cents.

In contrast, from 2013 to 2023, accumulated inflation has been 9%.

Former Minister of Economy Frank De Lima said that when studying the Consumer Price Index (CPI), it should be borne in mind that if it went down in some items it is because Panamanian does not have the capacity to purchase them or gives priority to other expenses.

“Press and shoes came down because people don’t have money and aren’t spending, as well as furniture and household items that because they are not of first necessity and there are no circulating and people don’t have a high purchasing power, they’re not going to spend on clothes or furniture,” De Lima argued.

Another element to take into account is that several of these expenses were subsidized such as electricity and fuel, so the data would be distorted.’

39 Percent was the year-on-year increase in electricity the strongest last year despite remaining subsidised.

In the case of food, which rose 3.4%, the former Minister of Economy specified that there are measurements that are made on products that still enjoy price control, which this government maintained.

“That’s why people feel that when they go to super inflation it is higher than the 3.4% that the Inec table is indicating, because there is often a shortage of those products or buy another brand,” he said.

The Government maintained these measures with the aim of ensuring that inflation would not increase, however, 2024 starts without some subsidies and with increases such as electricity.

Of distinction as to inflation can be reduced, there is a reduction in purchasing power.

This is what economist Solomon Samudio thinks, who believes that in the absence of policies aimed at boosting consumption, we find this situation.

This article has been translated from the original which first appeared in Panamerica