Peru | Inflation of the year 2020 ended at 2.0%

Summary

In December, the Consumer Price Index increased 0.05%. The low observed inflation was mainly explained by the decrease in the prices of some foods. With this result, inflation in 2020 closed at 2.0% in year-on-year terms.

Key points

• Key points:
• The low observed inflation was mainly explained by the decrease in the prices of some foods, offset by the increase in residential electricity and water service rates, as well as interprovincial bus tickets and air transport.
• Inflation excluding the Food and Energy components printed at 1.8% in December and has remained below 2.0% for 10 months.
• Our baseline forecast scenario considers that in the following months inflation in year-on-year terms will show a decreasing trend. In this context, we estimate that inflation will be located closer to the lower limit of the Central Bank's target range by mid next year and that it will close 2021 between 1.5% and 2.0%.
• We believe the price context will be appropriate for the Central Bank to maintain the current strongly expansionary monetary stance, with a reference interest rate that will remain at 0.25% during this year.

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