Peru | Inflation eases again in August… but only slowly

Summary

The Consumer Price Index for the city of Lima increased 0.67% MoM in August. This is a result of the increase in the prices food and electricity, compensated by lower transport prices.

Key points

• Key points:
• In YoY terms, inflation decelerated in August, reaching 8.4% (July: 8.7%).
• Inflation excluding food and energy, a trend measure of price changes, decreased as well: it went from 0.7% in July to 0.3% in August (5.4% YoY).
• In the following months, we expect inflation to continue decreasing, but more slowly than anticipated in our July forecast due to higher observed persistence and the recent increase in diesel prices.
• These elements imprint an upward bias on our inflation forecast for the end of 2022, currently at 6.8%. Consequently, the Central Bank will probably continue to tighten the monetary position in the short term, even though it is likely that the policy stance will soon move into contractionary territory.

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