Consumer Prices in Peru Fall Below 8%, Supporting Central Bank Ambitions

Peru’s central bank and Finance Ministry had separately insisted that inflation would fall below 8% in April

Peru's central bank targets annual consumer price rises of between 1% and 3%.
By Marcelo Rochabrun
May 01, 2023 | 12:36 PM

Bloomberg — Annual inflation in Peru’s capital came in above expectations last month, while decelerating below 8% for the first time in a year.

Consumer prices in Lima rose 7.97% in April from a year earlier, compared to the 7.8% median estimate of economists surveyed by Bloomberg. On a monthly basis, inflation rose 0.56%, according to statistics agency INEI. The central bank targets annual consumer price rises of between 1% and 3%.

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What Bloomberg Economics Says: “We see inflation extending its downtrend, aided by base effects, but falling less than the central bank expects and staying above target this year and next. Given that, we don’t expect policymakers to hike rates further, but they are likely to keep monetary conditions tight, with limited room for cuts.” — Felipe Hernandez, Latin America economist

Peru’s central bank and Finance Ministry had separately insisted that inflation would fall below 8% in April. Central bank President Julio Velarde has doubled down on getting inflation back to 3% by year-end. He has been wrong in the past, but this time around he has cautioned that inflation’s downward trend will be bumpy.

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The central bank has held its key interest rate at 7.75% for three consecutive months, after its steepest series of hikes ever. The bank will reassess its benchmark rate at its monthly meeting next week.

--With assistance from Rafael Gayol

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