Peru | Inflation rebounded in May after food price hike

Summary

The Lima Consumer Price Index (CPI) rose 0.27% MoM in May (-0.10% in April) due to higher food prices. Inflation in year-on-year terms was 2.4%.

Key points

• Key points:
• The upward trend maintained by the international prices of imported food inputs (such as corn, wheat and soybeans) and oil, as well as the depreciation pressures on the local currency, explain an important part of the inflation of the month.
• It should be added that inflation that excludes food and energy, a more trend measure of the rate at which prices are increasing, stood at 1.8% (1.7% in April).
• In our baseline forecast scenario, inflation in year-on-year terms will close the year at a level not very different from the current one. The international prices of food inputs will tend that the pressures on the supply side begin to dissipate. An appreciation of the exchange rate in a context in which there will be a significant trade surplus and assumes that the new government administration will maintain macroeconomic stability. Finally, it considers that economic activity will gradually normalize and that this year it will grow 10%.

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