Peru: Inflation jumps further above target in November
December 1, 2015
Consumer prices for Metropolitan Lima increased 0.35% in November over the previous month, which was above the 0.14% rise registered in October. This was also stronger than the 0.15% increase expected by the market. The result was driven almost entirely by higher prices for food and beverages. Prices for goods such as potatoes increased amid a disruption to agricultural production due to adverse weather conditions associated with El Niño.
Inflation increased from 3.7% in October to 4.2% in November. Consequently, inflation moved further above the upper limit of the Central Bank’s target of 2.0% plus/minus 1.0 percentage points. The weak Peruvian sol is contributing to inflationary pressures, and above-target inflation led the Central Bank to hike its main interest rate in September for the first time in more than four years. The Bank held its rate in October but the latest inflation result may prompt another hike at the meeting scheduled for 10 December.
Author: Carl Kelly, Economist