Peru: Inflation drives higher in October
November 4, 2021
Consumer prices rose 0.58% over the previous month in October, a larger increase than the 0.40% rise logged in September. Looking at the details of the release, rising housing and utility costs, and steeper transport prices drove the overall increase.
Inflation came in at 5.8% in October, up from September's 5.2%. October’s figure represented the highest inflation rate since January 2009. Annual average inflation rose to 3.3% in October (September: 3.0%). Lastly, core inflation came in at 2.8% in October, rising from 2.6% in the previous month.
Regarding the impact of rising inflation on monetary policy, Diego W. Pereira, economist at JPMorgan, commented:
“In all, we hold to our base case for 50bp policy rate hike next week. But the inflation surprise should drive the Board to add another 50bp in December, so for the policy rate to close the year at 2.5%. If we are on the mark, the policy rate would close the year 25bp above the pre-Covid level. For 2022, we expect the policy rate to reach 4%, driving the ex-post and ex-ante real rates close to the 2011-19 average level.”
Author: Stephen Vogado, Economist