Inflation in Peru's capital, Lima, unexpectedly accelerated for the sixth consecutive month in April, hitting its fastest pace since late 2023. Consumer prices rose 4.01% in April over the last 12 months, according to data released by the national statistics agency INEI. This reading was higher than March's 3.80% and surpassed the Bloomberg economists' median estimate of 3.70%. This marks the highest annual inflation print since October 2023, which recorded 4.34%.
This trend of rising inflation in Lima has been ongoing, with June's consumer prices also increasing by 4.01% from a year prior, exceeding the 3.91% in May and the 3.81% median estimate from Bloomberg-surveyed economists bloomberg.com. Similarly, July saw an acceleration to 4.07% from the same month a year earlier, above the 3.92% median estimate, driven by significant increases in transport (14.30%), restaurants and hotels (4.18%), and food and non-alcoholic drinks (3.46%) financialpost.com.
Peru's inflation rate has remained above the central bank's target range of 1% to 3% since March, with the annual rate in July reaching 4.1% bbvaresearch.com. The consistent rise is attributed to factors like food supply restrictions, seasonal demand for transport, and global energy shocks financialpost.com, bbvaresearch.com. The central bank's policy rate has been held at 4.25% for ten consecutive months, but a hike is not ruled out if inflationary expectations continue to rise.
Despite the inflationary pressures and the threat of the El Niño weather phenomenon, Peru's economy is projected to grow by more than 3% this year, fueled by high metal prices and strong private spending financialpost.com. The new administration under President Keiko Fujimori aims to ensure fiscal sustainability, reduce regulatory burdens, and boost investment, potentially improving investor confidence.
