Peru: Inflation rises above Central Bank's tolerance margin
August 1, 2013
Consumer prices for Metropolitan Lima jumped 0.55% over the previous month in July. The figure was up from June's 0.26% rise and overshot market expectations of a 0.40% increase. The main drivers behind the monthly increase were higher prices for food and alcoholic beverages (especially for fresh food) and a seasonal increment in transportation costs.
Annual headline inflation rose from 2.8% in June to 3.2% in July, the highest level observed since October 2012. With the July increase, inflation rose above the upper ceiling of the Central Bank's 1 percentage point tolerance margin around its 2.0% target.
The Central Bank's June inflation report indicated that it expects inflation to end both this year and next within a range of 1.5% to 2.5%. LatinFocus Consensus Forecast panellists are slightly less optimistic and expect inflation to end 2013 at 2.5%, which is unchanged from last month's projection. For 2014, the panel expects inflation to fall to 2.4%.
Author: Ricardo Aceves, Senior Economist