Peru | Inflation getting closer to the target range

Summary

The consumer price index dropped 0.16% m/m in November. During the month, the decrease in some food prices stood out, due to supply shocks they faced in recent months starting to dissipate.

Key points

• Key points:
• The year-on-year rate fell from 4.3% in October to 3.6% in November, favored by a high comparison base (inflation in November 2022 was 0.52% m/m).
• Core inflation, in year-on-year terms, fell to 3.1% (October: 3.3%).
• In our base scenario, we expect inflation to close the year around 3.5%. However, the bias in this projection is markedly downward.
• Thus, with inflation decreasing faster than expected, already very close to the target range, economic activity not showing significant recovery, a monetary position in restrictive territory, and despite the fact that the El Niño phenomenon would continue until the summer of 2024 with moderate/strong intensity, we maintain the forecast that the Central Bank will continue to cut its monetary policy interest rate in the short term.

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