Peru | Inflation rebounded in February, surprising on the upside

Summary

The consumer price index increased 0.56% MoM in February. The result for the month is mainly explained by the increase in the prices of some foods, particularly poultry, affected by high temperatures in February, and the readjustment in some administered rates, such as in the case of water.

Key points

• Key points:
• The YoY rate increased from 3.0% in January to 3.3% in February, above the target range of 2% +/- 1%.
• Core inflation, in year-on-year terms, reached 3.1% (January: 2.9%), also above the range.
• In our base scenario, we predict that inflation will soon resume its downward path, returning to the target range in the coming months and even falling further.
• Considering the cautious attitude of the Central Bank, but also that the deviation of inflation from the target range is temporary and that exchange rate pressures have been contained in recent days, at BBVA Research we continue to anticipate that limited rate cuts will continue in the short term, with a reduction in March of 25bp, thus giving some support to the recovery of activity.

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