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Peru Inflation December 2020

Peru: Inflation drops slightly in December

Consumer prices in Metropolitan Lima increased 0.05% in December over the previous month, softening from November’s 0.52% rise. December’s moderation was mainly caused by falling food and beverage prices.

Inflation dropped to 2.0% in December from 2.1% in November. However, the trend was unchanged for the sixth month running, with annual average inflation coming in at 1.8% in December. Lastly, core inflation was ticked up marginally, coming in at 1.8% in December from 1.7% in November.

Regarding the December print, and looking ahead to 2021, Diego W. Pereira and Lucila Barbeito, economists at JP Morgan, commented:

“The December 2020 CPI report proved our view on the November’s upside CPI print correct: it was indeed a temporary event obeying to seasonal and supply disruptions for food prices. But it also brought higher than expected core inflation, which we believe should correct in January and February. Therefore, we maintain our base case for relatively stable headline inflation throughout 2021. We expect headline inflation to average less than 20bp per month in 1H21, and reaching 1.9%oya by December 2021.”

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