Inflation in Peru will return to the target range between 1% and 3% in the fourth quarter of 2022, projected this Friday the Central Reserve Bank (BCR).
According to the monetary entity, inflation in January reached 0.04%, the lowest in the last nine months, when in April 2021 it fell by 0.10%.
With this, the year-on-year rate decreased from 6.4% in December 2021 to 5.7% in January 2022, one of the lowest rates among the main countries in the region.
What are the factors?
For the BCR, this reduction will respond to the reversal of the effect of transitory factors that boosted inflation in previous months, such as the rise in the exchange rate, international fuel prices and grains. Likewise, the fact that economic activity will still be below its potential level will have an influence.
So far this year, the dollar accumulates a fall of 5.39% as of February 11, favoring the decrease in prices.
“Inflation in the following months will continue to hover around 6% and then, with more moderate monthly rates, year-on-year inflation will begin to decline as of July.”, commented the central manager of Economic Studies of the entity, Adrián Armas.
However, he indicated that a greater persistence in the rise in international energy and food prices has been observed.
In this sense, Armas stated that the BCR is permanently monitoring new information that influences inflation and inflation expectations, as well as the evolution of economic activity.
Thus, if necessary, changes in the monetary policy position will be considered to guarantee the return of inflation to the target range.
He also referred that in a context of higher inflation, the BCR has been withdrawing the monetary stimulus that it applied during the pandemic, to face the upward pressures on prices and anchor inflationary expectations.
He argued that since August of last year he has been raising the reference interest rate every month, in addition to applying other measures such as the increase in reserve requirements in national currency. Yesterday, Thursday, the Central Bank raised its interest rate again, taking it to 3.5%.
Comparison with other countries
The official explained that an acceleration of inflation has been observed in the world since the middle of last year. But, in January, both headline inflation and core inflation in Peru were among the lowest in the region and in the United States included.
In the first case, inflation of 5.7% in Peru is lower than the 10.4% in Brazil, 7.7% in Chile and 7.5% in the United States, among others.
Regarding subjacent inflation, the rate of 3.1% in our country last January is lower than that of Brazil (8%), Chile (7.1%) and Mexico (6.2%), among other economies.
peruvian economy
Regarding economic activity, Armas said that the indicators for December and January indicate that it would be above its pre-pandemic level. Likewise, formal employment is also at levels higher than 2019.
However, he stressed that most of the indicators of expectations about the economy are still in the pessimistic section in January of this year.
