Peru | Negative monthly inflation in May, but the annual rate remains close to 4.0%

Summary

In May, the Metropolitan Lima CPI fell 0.16% m/m (consensus: +0.08%). The decline was driven mainly by lower prices for food (–1.69%) and transport (–0.19%). As a result, annual inflation eased to 3.9%, from 4.0% in April.

Key points

• Key points:
• The Lima CPI fell 0.16% m/m in May (after +0.52% in April), against the +0.08% expected by consensus; annual inflation eased to 3.9% (from 4.0%)
• The decline came from food and non-alcoholic beverages (–1.69%), with a sharp drop in raw chicken (–9.4%), and from the transport category (–0.19%), driven by lower prices for vehicular LPG (–6.6%) and diesel (–1.2%).
• In contrast, residential electricity rose (+4.2%, new tariff schedule) as well as domestic propane gas (+0.3%). Core inflation rose 0.09% m/m and held at 4.4% year-over-year.
• Outlook: despite the negative monthly reading, annual inflation would remain above the target range in the coming months, owing to a statistical base effect and the downward rigidity of transport fares.
• Thus, we expect inflation to close 2026 above 4.0%; in this context, the BCRP would keep its policy rate at 4.25%, with an upward bias.

Geographies

Topics

Tags