Peru | Inflation moderates slightly, but prices remain under pressure looking forward

Summary

The Consumer Price Index of Lima registered a variation of 0.36% MoM in November (Bloomberg consensus: +0.30%). This is mainly a result of higher fuel prices, water tariffs and prices of food in restaurants.

Key points

• Key points:
• In YoY terms, inflation stopped increasing and printed at 5.7% in November (October: 5.8%; December 2020: 2.0%).
• Inflation excluding food and energy, a trend measure of price changes, has maintained an ascending trajectory and went from 2.8% in October to 2.9% in November.
• We expect inflation to remain at high levels in the following months, around 6%, and above the target range of the Central Bank even during 4Q22 closing next year just slightly below 3%.
• This forecast considers that the increase in wholesale prices will continue to be passed on to consumers and that unanchored inflation expectations will generate some inertia in headline inflation. The impact of the omicron variant constitutes an element of uncertainty in the forecast.
• In this context, the Central Bank will probably continue to tighten the monetary policy stance.

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