For the second time, authorities have issued a six-month extension to food price controls in Panama that were brought into effect July 2014.
Minister of Trade and Industry Meliton Arrocha announced the extension. “Some employers are not happy with the move, but we also have people who ask us to include more products to control prices,” he said.
The price controls were instituted by newly elected President Juan Carlos Varela in response to food prices inflating at a faster rate than overall consumer prices. Inflation for the food items included in the price controls had reached 30% in five years.
The controls covers 22 basic food items such as potatoes, beans, chicken, tuna, rice, milk, eggs, and steak. The committee supervising the price controls in Panama has recommended that four more items be added to the list of controlled items: coffee, pasteurized milk, sugar, and cooking oil.
Originally, the government claimed the measure would save an average family US$58 per month. However, the government acknowledges that real savings have been US$48 per month. The controls were initially intended to last until December 2014, but were then extended another six months.
The price controls in Panama have come under fire from some, claiming that the price controls interfere with supply and demand principles and fail to take a product’s quality into account.
Proponents of the controls claim that run-away inflation of food items was padding the wallets of rich supermarket owners, such as the embattled former President Ricardo Martinelli, at the expense of low-income individuals.
Noncompliance with the price controls carries a fine of up to US$10,000. During the first five months of 2015, 2,244 instances of noncompliance resulted in US$98,000 in fines.
It is unclear if the latest extension of the price controls in Panama will be the last or if another extension will be considered in December 2015.