Peru: Inflation increases in August to over-three-year high
September 1, 2015
Consumer prices for Metropolitan Lima in August increased 0.37% over the previous month, which followed the 0.45% rise registered in July. The result slightly overshot market expectations of a 0.30% increase. The result was broad-based, as seven of eight components of the index gained ground in August. The largest increase was recorded in the housing, fuel and electricity category, followed by food and beverages. Transport and communication was the only category to register lower prices compared to the previous month.
Annual headline inflation increased from 3.6% in July to 4.0% in August, which marked the highest result in over three years. Consequently, inflation pushed further above the upper limit of the Central Bank’s target of 2.0%, plus/minus 1.0 percentage point. The sharp depreciation of the Peruvian sol is contributing to inflationary pressures and further price increases may lead the Central Bank to hike its main interest rate, which has been kept at 3.25% since January.
Author: Carl Kelly, Economist