Peru: Inflation reverses trend and falls in October
November 1, 2010
In October, consumer prices slipped 0.14% over the previous month. The monthly price fall was below the 0.03% drop registered in September and contrasted market expectations, which had consumer prices rising 0.14%. The October reading mainly reflected lower prices for food and beverages (-0.68% month-on-month), which more than offset higher prices for clothes and footwear (+0.45% mom). As a result of the price drop, annual headline inflation fell from 2.4% in September to 2.1% in October, reversing the upward trend started in December 2009, but exceeding the Central Bank target rate (2.0% 1.0 percentage point) for the third consecutive month. In its September inflation report, the Central Bank raised its year-end inflation forecast for this year to 2.5% - 3.0% from 2.0% - 2.5% previously expected. For 2011, monetary authorities expect inflation to end between 1.5% and 2.5%.
Author: Ricardo Aceves, Senior Economist