Peru | Annual inflation exceeds 4% despite monthly moderation

Summary

Lima's CPI rose 0.52% m/m in April, above the Bloomberg consensus (0.20%) but moderating from March's 2.38%. Annual inflation reached 4.01%, exceeding 4% for the first time since October 2023, driven by the persistent pass-through of the energy shock to transport costs.

Key points

• Key points:
• Monthly inflation in Lima moderated to 0.52% in April, following March's historic 2.38%. However, inertia from prior shocks pushed the annual rate to 4.01%, exceeding 4% for the first time since October 2023.
• The Camisea shock partially reversed (vehicular LPG –22.5%), but Middle East tensions kept diesel (+14.7%) and gasohol (+4.2%) under pressure. Urban fares continue rising on second-round effects (combi +9.5%, omnibus +8.0%), making transport the main driver of the month (86% of the result).
• Food cushioned the rise (–0.26% m/m) as chicken prices fell (–8.2%), but vegetables (+2.1%) and seafood (+2.3%) remain under pressure. CPI excluding food and energy stays elevated at 0.87% m/m.
• We maintain our year-end forecast at 2.6% with an upward bias. We expect the BCRP to remain cautious, monitoring the evolution of inflation expectations (2.5% in March).

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