Published on Tuesday, May 2, 2023

Peru | Year-on-year inflation falls, but less than expected

Inflation increased 0.56% monthly in April. This was due to the rise in the prices of some foods and restaurants, to which was added the seasonal increase in interprovincial land and air transport tickets due to the long Easter holiday.

Key points

  • Key points:
  • The year-on-year inflation rate decreased to 7.97% in April (March: 8.40%), favored by a high base of comparison (April 2022 inflation was 0.96% m/m).
  • Core inflation registered a level of 5.66% in interannual terms, the first reduction so far this year (March: 5.92%). Despite this, it remains significantly above the Central Bank's target range.
  • At BBVA Research we continue to estimate that inflation will continue to decline in the coming months. However, the speed of this decline will depend on (i) the impact that weather anomalies have on agriculture, fishing, and eventually transportation to supply markets; and (ii) the behavior of business margins, which were compressed in 2021 and 2022, when the increase in costs was not fully transferred to the final consumer.
  • For this reason, although we continue to anticipate that inflation will end the year at around 3.5%, we also maintain the upward bias regarding this forecast.

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