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Economic activity in Peru grew 3.6% year-on-year in July, exceeding forecasts. The dynamism of non-primary sectors, such as construction and commerce, was the main driver, offsetting the weakness in primary sectors, which were affected by climate anomalies and a contraction in fishing.

Headline inflation increased by 0.7 pp, to 4.3% year-on-year, while core inflation decreased by 0.1 pp, to 2.9%, in line with expectations. In September, headline inflation could rebound to 4.7%-4.9%, driven again by energy and, to a lesser extent, by food.

The Central Reserve Bank of Peru kept the interest rate at 4.25% but adopted a more restrictive tone. It removed the conditionality for future adjustments, increasing the probability of a rate hike this year. Annual inflation rose to 4.4% in August, and 12-month expectations stand at 3.1%.

Argentina's August inflation was 1.7% MoM, in line with expectations, decelerating from 2.1% in July due to seasonal price dynamics. Core inflation remained stable. The 2026 inflation forecast is maintained at 29%, with a slight upward bias for the remainder of the year.

The 2027 economic package projects a gradual fiscal consolidation with a wide deficit of -3.9% of GDP. Despite fiscal prudence, challenges remain due to low tax collection and spending rigidity. Seeking revenue growth without a comprehensive reform limits fiscal space for more public investment.

Annual inflation resumed its upward trend in August and stood at 6.24%, 21 bps above July and 114 bps above the level observed at the end of last year.

Inflation in Peru stood at 0.07% month-on-month in August, raising the year-on-year rate to 4.4%. This increase is due to the readjustment of electricity tariffs and the rise in fuel prices. Core inflation moderated to 4.5%, but remains above the target range. Inflation is expected to remain high in the coming months.