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Drop in inflation will not benefit the most vulnerable families

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Despite the tiny decline in inflation recorded in the national month (it went from 1.19% in June to 0.94% in July), for the vast majority of Peruvians this phenomenon will continue to be a headache when managing the home economics.

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This represents one more lump in the heavy backpack that we have been dragging since the arrival of the coronavirus in our country, according to the former Vice Minister of Mype and Industry Juan Carlos Mathews, given that the weakening of employment and the fall in income will aggravate the outlook.

“Incomes fall, are irregular or even lower than before covid, and adequate employment has not improved significantly. Every time you go to buy it is enough for less and this affects those who have less consumption capacity. Precarious employment and inflation are a poisonous mix”, he noted for La República.

Mathews emphasizes that approximately 6 out of 10 Peruvians live in poverty and/or vulnerability, considering that 25.9% of the population is poor —including the extreme poor in this range— and that 34.6% is at risk, according to INEI.

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Along these lines, Juan Carlos Odar, director of Phase Consultores, predicts that there will be no reduction in the poverty rate this year, and one could even speak of a marginal increase in Peruvians in this situation.

Has inflation peaked?

Julio Velarde, president of the Central Reserve Bank of Peru (BCRP), announced that in July the inflationary peak would be reached and then begin a gradual decline. Under this premise, Odar forecasts that the Consumer Price Index (CPI) would close at 7.2% this year. A higher estimate than that forecast by the BCRP but similar to that of other specialized agencies (see infographic).

“Although there has been a slight inflection in July, the moderate decline is likely to begin. There will be some recovery in domestic demand with the withdrawal of AFPs and CTSs. It’s not that it’s a big universe, but there will be more liquidity available,” he said.

Odar warns that the rest of the consumer basket has begun to be contaminated by rising prices, since without counting food and energy, inflation reached its highest level since October 2000: 5.4%.

Economist Eduardo Recoba agrees that inflation will ease slowly, but the highest strata will perceive it. “You should try not to look for long-term debt in dollars because it will maintain its upward pressure. Markets and sales channels must be diversified with more affordable and competitive prices; and if the family can afford it, get ahead of the campaigns and buy off-season products”, he recommended.

Inflation in the region during 2022

This year Peru will have the third lowest inflation in the region, projects FocusEconomics Consensus Forecast LatinFocus, only surpassed by Bolivia (2.7%) and Ecuador (3.1%). The ranking is followed by Mexico (7.3%), Brazil (8.1%), Paraguay (8.6%), Uruguay (8.8%), Colombia (9%), Chile (9.9%) and Argentina (73.5%).

According to data available as of May for Latin America, inflation in Mexico stands at 7.7%, Peru’s at 8.8%, Chile at 11.5% and Brazil at 11.7%. buying enough for less and this affects those who have less. Precarious employment and inflation are a poisonous mix.”

Source: Larepublica

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