Peru | The annual inflation rate remains relatively stable

Summary

In October, the Consumer Price Index increased by 0,02%. With this outcome, inflation in year-on-year terms fell from 1,8% in September to 1,7%, thus remaining relatively stable in recent months.

Key points

• Key points:
• Inflation that excludes food and energy also fell from 1,8% in September to 1,7% in October. Since March it has fluctuated in a range that goes from 1,7% to 1,9%.
• In general, inflation has found resistance to decrease in the depreciation of the local currency, the higher costs derived from health protocols, and certain weather anomalies.
• Both households spending weakness and a YoY depreciation rate of the local currency -currently around 7%- that will not climb much more but, on the contrary, we expect it to decline since early 2Q21 suggest that YoY inflation will go down in the coming months.
• In this context, we expect it to come closer to the lower bound of the Central Bank's target range, especially towards mid-2021.
• This inflation outlook gives room for the monetary policy rate to remain next year at its 0,25% current level.

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