Answer: It depends!
Depends on many things: what you are comparing, and where you are comparing? Obviously you expect to pay more for everything in cities with higher costs of living.
But let’s talk about a basic: FOOD.
Everyone expects everything to be cheaper in Panama, but it’s not. Eating out in a good restaurant, a little classy with menu, ambience and service, is frankly about the same. As I discovered last year when I was comparing the cost of a nice meal at Panamonte Hotel in Boquete with a restaurant overlooking Puget Sound in Seattle, right across from Pike Market, operated by a well-known, local, “name” chef … the cost was about the same, not including the outrageous cost of parking.
But this is what I don’t understand, and it doesn’t apply just to Panamonte, but to a lot of nicer restaurants in Boquete. The minimum wage in Panama is $1.65 an hour. The minimum wage in Seattle is $11 going to $15 an hour! Let’s assume for a moment that food costs are about the same, and I’ll explain that in a minute. The restaurant across from Pike Market is in just about the highest rent district in Seattle. By contrast Panamonte has been in the chef/restaurateur’s family for decades. So how on earth do you justify similar or the same prices? Even with a 25% Pensionado discount, which most of our tourists who are Panamanians from Panama City don’t receive, I still don’t get it.
I paid less, LESS, for a cup of Costa Rican Tarazzu coffee, at a coffee shop in Alki, the expensive beach area of Seattle. Not just any coffee shop, but one right next to a Starbuck’s, but this one was more exclusive because …. there was a big picture by the door of Obama getting his Java fix there in 2010. And he had cash in his hand! I didn’t think Presidents carried cash. So why, given the much lower rent, much lower cost of employees, and the fact that we grow the stuff, does a cup of coffee in Boquete cost more than at Alki in Seattle?
In May of this year  I did a comparison of food costs in Sonoma County [right in San Francisco’s North Bay area in the heart of wine country where you expect prices to be higher] and Panama. It’s well worth taking a look at that comparison.
A few days ago a reader, Keith Dick, sent me a “Gringo Food Comparison” of prices at various grocery stores in Coronado, a community right on the beach, VERY popular with Panamanians who create major traffic jams on holidays heading from the city to Coronado, and also very popular with expats who want to be nearer to the city in a well-developed beach community with lots of stores, restaurants and amenities. [I love it when you send me this stuff!] So here it is … and all the markets listed are well-known in Panama.],
And since I was visiting my other daughter near Seattle, another high rent district, I thought I would do another comparison, this time to the lowest prices available in Coronado. I went down the road to the Fred Meyer [part of Albertson’s Corp] down the way in Burien and here’s that comparison …
Now, we’re looking largely at familiar US American brand names, so since they have to be shipped and imported, you expect to pay more. The more you can adjust to life in Panama and become acquainted with local products and non-US brands the more you can save. And don’t just assume the brands with which you are familiar are better! But North Americans being North Americans we tend to gravitate to the familiar, which is what brand marketing is all about.
And while there is only one Panamonte in Boquete, and a few other restaurants who try to achieve the same, you can eat a great, local lunch at a local Panamanian restaurant for under $5 including drink where you’d be embarrassed to ask for a Pensionado discount.
And there is a whole list of important stuff that really IS cheaper … much medical care and dentistry, really good rum, farm fresh local produce, tropical fruits, fresh fish including fantastic Ahi tuna at about $4 a pound, wonderful shrimp, men’s haircuts for $3 women’s for $30, car insurance for a fraction of what you’d pay in Washington or California, and the list goes on. Housing … depends on where you’re comparing. There is a wide, wide range of housing costs in various areas of the US. Compared with some areas in the US, housing in many areas of Panama is a bargain, from other areas the cost of housing here is equal, or maybe even more.
So how do you figure all this out? Take your time, do your research, then do some more. Compare what folks are saying. Don’t just listen to me OR International Living or all the other folks who promote Panama. Come on down! Read my book. Come down and test-drive Panama for a while before making the leap. You need to look at the whole picture, not just one aspect.