Peru | Inflation begins to move closer to the midpoint of the target range

Summary

Lima’s CPI rose 0.10% m/m in January 2026, in line with consensus. Annual inflation reached 1.7%, still within the target range. The monthly increase was driven by higher food prices, while transport prices fell seasonally. Core inflation edged up to 2.0%.

Key points

• Key points:
• In January, monthly inflation was driven by higher food prices (poultry products, fruits, and tubers), while transport prices fell seasonally after the December holiday-related increase.
• Core inflation (excluding food and energy) rose 0.04% m/m, pushing its annual rate from 1.8% to 2.0% in January.
• Looking ahead, annual inflation is expected to trend higher in 2026 as the effects of the currency appreciation and the decline in international input prices, including oil, gradually fade.
• An additional upside risk stems from warmer-than-usual weather conditions from March onward, which could affect the supply and prices of domestically produced food.
• In this environment, we expect inflation to close 2026 around 2.5%, within the target range, and the central bank to keep the policy rate at 4.25%, as limited space for rate cuts remains amid inflation risks, activity near potential, and heightened electoral uncertainty.

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