Peru | No surprises: inflationary pressures remain absent

Summary

The CPI rose by 0,13% m/m in June, broadly in line with analysts’ consensus. As a result, year-on-year inflation remained at 1,7%, comfortably within the Central Bank’s target range. Core inflation, which excludes food and energy, on the other hand, declined and also stood at 1,7%.

Key points

• Key points:
• In June, food prices increased, particularly for fruits and fish, due to supply-related factors. However, fuel prices decreased, both for household and transportation use.
• We estimate that in the third quarter inflation will remain between 1,5% and 2,0% on a monthly average. For the last quarter of the year, we expect a slight increase due to the low year-on-year comparison base, leading inflation to end 2025 at around 2,2%.
• Given this inflation outlook and taking into account the cyclical position of the Peruvian economy, we keep believing that the Central Bank has concluded the normalisation process of its policy rate, currently at 4,50%, a level we consider to be neutral.
• This forecast has a downward bias (an additional rate cut cannot be ruled out) because inflation will remain below the centre of the target range in the next few months and the domestic currency is experiencing appreciation pressures.

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