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Peru: Inflation hits highest level since May 2019 in January

February 4, 2021

Consumer prices in Metropolitan Lima rose 0.74% in January over the previous month, picking up from the 0.05% increase seen in December. January's result marked the sharpest increase in prices since March 2017, and was predominantly driven by rising food and energy prices.

Inflation came in at 2.7% in January, from December’s 2.0%. January's figure was the highest inflation rate since May 2019. Annual average inflation edged up to 1.9% in January (December: 1.8%). Core inflation edged down to 1.7% from the previous month's 1.8%.

FocusEconomics’ analysts forecast inflation to end 2021 at 2.0%, up 0.2 percentage points from last month’s forecast, and end 2022 at 2.2%.

Author:, Economist

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Peru Inflation Chart

Note: Month-on-month and year-on-year variation of consumer price index in %.
Source: Peru National Statistical Institute (INEI).

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Consumer prices in Metropolitan Lima rose 0.74% in January over the previous month, picking up from the 0.05% increase seen in December.

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Inflation as measured by the consumer price index reflects the annual percentage change in the cost to the average consumer of acquiring a basket of goods and services that may be fixed or changed at specified intervals, such as yearly. The Laspeyres formula is generally used.

Peru inflation rate for 2020 was 1.83%, a 0.31% decline from 2019.

Peru inflation rate for 2019 was 2.14%, a 0.82% increase from 2018.

Peru inflation rate for 2018 was 1.32%, a 1.49% decline from 2017.

Peru inflation rate for 2017 was 2.80%, a 0.79% decline from 2016.

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Inflation as measured by the consumer price index reflects the annual percentage change in the cost to the average consumer of acquiring a basket of goods and services that may be fixed or changed at specified intervals, such as yearly. The Laspeyres formula is generally used.

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The Board of Directors of the Central Reserve Bank of Peru (BCR) has decided to raise the benchmark interest rate by 50 bps to 5.0%, thus continuing to normalize its monetary policy stance.

Publicado: 13/5/2022

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peru: bcr raises benchmark interest rate to 5.0%

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Empresa Peruana de Servicios Editoriales S. A. EDITORA PERÚ

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Peru: BCR raises benchmark interest rate to 5.0%

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The Board of Directors of the Central Reserve Bank of Peru (BCR) has decided to raise the benchmark interest rate by 50 bps to 5.0%, thus continuing to normalize its monetary policy stance. Publicado: 13/5/2022

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The annual inflation rate in Peru accelerated to 7.96 percent in April of 2022, from 6.82 percent in the previous month. It was the highest inflation rate since May of 1998, due to rising food and energy prices, amid the Ukraine war. On a monthly basis, consumer prices were up 0.96 percent, easing from a 1.48 percent rise in the previous month, which was the highest monthly reading in 26 years. source: Instituto Nacional de Estadística e Informática (INEI)

Inflation Rate in Peru averaged 259.21 percent from 1970 until 2022, reaching an all time high of 12377.32 percent in August of 1990 and a record low of -1.11 percent in February of 2002. This page provides - Peru Inflation Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news. Peru Inflation Rate - data, historical chart, forecasts and calendar of releases - was last updated on May of 2022.

Inflation Rate in Peru is expected to be 8.23 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long-term, the Peru Inflation Rate is projected to trend around 2.00 percent in 2023, according to our econometric models.

Peru Inflation Rate

In Peru, the most important categories in the CPI basket are Food and Non-Alcoholic Beverages (25.7 percent of the total weight); Transportation (12.6 percent) and Restaurants and Hotels (11.9 percent). Housing, Water, Electricity and Other Fuels account for 9.2 percent and Education for 9.1 percent. Others include: Miscellaneous Goods and Services (6.8 percent); Furniture and Household Equipment and Conservation (5.7 percent); Clothing and Footwear (5.5 percent); Leisure and Culture (5.4 percent); Communications (4.3 percent); Health Care (3.4 percent) and Alcoholic Beverages, Narcotics and Tobacco (1.2 percent). The CPI index has a base of 100 as of 2009. The index tracks the metropolitan area of Lima.

| Actual | Previous | Highest | Lowest | Dates | Unit | Frequency |

7.96

6.83

12377.32

-1.11

1970 - 2022

percent

Monthly

2001=100

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2022-03-07

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Peru Inflation Rate - April 2022 Data - 1970-2021 Historical - May Forecast - Calendar

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The annual inflation rate in Peru accelerated to 7.96 percent in April of 2022, from 6.82 percent in the previous month. It was the highest inflation rate since May of 1998, due to rising food and energy prices, amid the Ukraine war.

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Inflation data showed a slowdown in annual price increases in April, but a closely watched monthly price measure continues to rise at an uncomfortably brisk rate.

The pressures that have kept inflation elevated for months remain strong, fresh data released Wednesday showed, a challenge for households that are trying to shoulder rising expenses and for the White House and Federal Reserve as they try to put the economy on a steadier path.

Annual inflation moderated for the first time in months in April, but the Consumer Price Index still increased 8.3 percent, an uncomfortably rapid pace. At the same time, a closely watched measure that subtracts food and fuel costs actually accelerated.

Core inflation - which excludes costs for groceries and gas - picked up 0.6 percent in April from the prior month, faster than its 0.3 percent increase in March. That measure is particularly important for policymakers, who use it as a gauge to help determine where inflation is headed.

While the letup in annual inflation may have given President Biden and the Fed a dose of comfort, the overall picture remains worrying. Policymakers have a long way to go to bring price increases down to more normal and stable levels, and the newest data is likely to keep them focused on trying to slow an inflation rate that remains near its fastest pace in 40 years.

"Inflation is too high - they need to bring it down," said Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives. "The re-acceleration in core inflation is unwelcome."

The report renewed fears among investors that the Fed could speed up plans to raise interest rates, which would further take steam out of the stock market. The S&P 500 fell 1.6 percent, extending a five-week slide that has taken it to the cusp of a so-called bear market - a drop of more than 20 percent from a recent peak. At the close of trading, the index was 18 percent below its January record high. The tech-heavy Nasdaq composite, which has been in a bear market for months, fell 3.2 percent.

Annual inflation may have now peaked, having climbed by an even-quicker 8.5 percent in March. It slowed down in April partly because gas prices dropped lower, and partly because of a statistical quirk that will continue through the months ahead. Yearly price changes are now being measured against elevated price readings from last spring, when inflation started to take off. The higher base makes annual increases look less severe.

Still, even the White House greeted the new report with concern.

"While it is heartening to see that annual inflation moderated in April, the fact remains that inflation is unacceptably high," Mr. Biden said in a statement. "Inflation is a challenge for families across the country, and bringing it down is my top economic priority."

Economists do expect price increases to continue to ebb somewhat this year, because they think that consumer demand will taper off and that supply chain stresses will ease. The crucial question is how much and how quickly that moderation might happen.

Many analysts have been predicting a slowdown in price increases or even outright price cuts on many goods, but those forecasts look increasingly uncertain. Lockdowns in China and the war in Ukraine threaten to exacerbate supply shortages for semiconductor chips, commodities and other important products.

"There are persistent issues in supply chains," said Matthew Luzzetti, chief U.S. economist at Deutsche Bank. "And the most recent developments have not been positive."

The path ahead for the car market, for instance, remains unclear. Supply shortfalls for used vehicles show some signs of easing, but shortfalls persist in computer chips, which are crucial to automobile production. As a result, companies are still struggling to complete vehicles.

Prices for used cars and trucks declined in April from the prior month, though the drop was smaller than the one in March. While car parts had become cheaper in March, they resumed their monthly increase in April. New car prices also accelerated after a lull, climbing 1.7 percent from the prior month.

Image

Dining outdoors in Brooklyn last week. Inflation is still running at around the fastest rate in four decades, including steeper prices for services like restaurant meals. Credit... OK McCausland for The New York Times

And services prices are now increasing quickly, as rents climb and as worker shortfalls lead to higher wages and steeper prices for restaurant meals and other labor-intensive purchases. If that continues, it could keep inflation elevated even as supply problems are resolved.

Rents picked up by 0.6 percent in April from March, and a measure of housing costs that uses rents to estimate the cost of owned housing climbed 0.5 percent, up from 0.4 percent the prior month. The pickup in housing costs is particularly important, because they make up about a third of the overall inflation index.

"Domestically generated inflationary pressures remain strong," Andrew Hunter, senior U.S. economist at Capital Economics, wrote after the report was released.

Part of the increase in core inflation in April owed to trends that should not last, most notably a big pop in airfares as travel demand surges after the latest wave of the coronavirus. Even so, Ms. Rosner-Warburton said she expected annual C.P.I. inflation to remain 5.1 percent at the end of the year, far above levels that prevailed before the pandemic.

Inflation F.A.Q.

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The Fed aims for 2 percent annual inflation on average, though it defines that goal using a related but different measure that tends to run slightly lower and comes out with more of a delay. That inflation index picked up by 6.6 percent over the year through March, and April figures will be released later this month.

The fact that high inflation is lasting so long is a problem for the central bank. After a full year of unusually swift increases, household and investor expectations for future price changes have been creeping higher, which could perpetuate inflation if households and businesses adjust their behavior, asking for bigger raises and charging more for goods and services.

As such risks have mounted, the Fed has begun to lift interest rates to try to keep price increases from galloping out of control in a more lasting way. In March, Fed policymakers lifted their main policy interest rate for the first time since 2018, then followed that up with the biggest increase since 2000 at their meeting last week.

By making it more expensive to borrow money, officials hope to weaken spending and hiring, which could help supply to catch up with demand. As the economy returns to balance, inflation should come down.

Central bankers are hoping that their policies will temper economic growth without pushing unemployment up or plunging America into a recession - engineering what they often call a "soft landing."

"I really want us to have that be the outcome, but I recognize that it's not going to be easy to do," Raphael Bostic, the president of the Federal Reserve Bank of Atlanta, said in an interview on Monday.

Officials have roundly acknowledged that letting the economy down gently will be difficult, and some have suggested that they would be willing to inflict economic pain if that was what it took to tackle high inflation.

If the economy gets to a point where unemployment begins climbing but inflation remains "unacceptably high," Mr. Bostic said, price increases will be "the threat that we have to take on board."

One challenge for policymakers - and even more for families - is that price increases are surfacing in essentials. Food costs rose 0.9 percent in April from the previous month, the 17th consecutive monthly increase, Wednesday's report showed.

The increase was driven by dairy, nonalcoholic beverages and a 10.3 percent monthly increase in the cost of eggs, as avian flu decimated poultry flocks. Such inflation tends to especially hit the poor, who spend a bigger chunk of their budgets on needs like groceries and gas.

But as Americans see strong job gains and strong wage growth - albeit not strong enough to fully counteract inflation - many are managing to shoulder the rising costs for now, keeping overall demand strong.

"Consumers appear willing to accept the higher menu prices, particularly as inflation is broad," George Holm, chief executive officer at the food distributor and restaurant supplier Performance Food Group, said on an earnings call Wednesday. "Still, this is something to closely monitor across the next few months and quarters."

Ana Swanson contributed reporting.

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Consumer Prices Are Still Climbing Rapidly

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Inflation data showed a slowdown in annual price increases in April, but a closely watched monthly price measure continues to rise at an uncomfortably brisk rate. The pressures that have kept inflation elevated for months remain strong, fresh data released Wednesday showed, a challenge for households that are trying to shoulder rising expenses and for the White House and Federal Reserve as they try to put the economy on a steadier path.