Peru: Inflation jumps to two-year high
May 2, 2011
In April, consumer prices rose 0.68% over the previous month, which was virtually unchanged from the 0.70% increase observed in March and well above market expectations of a 0.48% rise. The monthly rise reflected higher prices for clothing and footwear (+1.07% month-on-month), as well as for food and beverages (+1.21% mom), fuelled by elevated international food prices. Owing to the price spike, annual headline inflation jumped from 2.7% in March to 3.3% in April, which represented the highest inflation rate since May 2009. The reading exceeded the Central Bank's target of 2.0% for the ninth consecutive month and now sits above the upper limit of the tolerance margin of 1.0%. The Central Bank expects inflation will rise to a range of between 2.5% and 3.5% this year. For 2012, the Bank anticipates inflation will end the year within the 2.0% to 3.0% range.
Author: Ricardo Aceves, Senior Economist