Prices and Protests: The Inflation Problem

BMI View: The rapid acceleration of inflation has led to increased tension between Panama's trade unions and the government. The authorities have introduced a series of tax measures aimed at alleviating the impact of soaring food and transport costs. However, it has few monetary policy options at its disposal to tackle the inflations problem head on. We anticipate that headline inflation will end 2008 at 5.5%, far in excess of the 2.2% annual average since 2000.

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