Inflation will be above 3% in 2023, according to Citibank

By the end of 2022, an inflation rate of 8.46% was reported in Metropolitan Lima, the highest recorded in 30 years, according to the National Institute of Statistics and Informatics (INEI). By April of this year, it has fallen to 7.97%, one of the lowest percentages in the last 12 months.

At the end of 2023, inflation would be at 3.9%, estimated Citibank; however, this could change due to sociopolitical and climatic factors, such as the El Niño or Niño Costero phenomenon.

This forecast is close to the one made a few days ago by the Minister of Economy, Alex Contreras, who stated that if the trend observed in April continues, the consumer price index would end the year at around 3%.

A less optimistic scenario emerges from the latest expectations survey of the Central Reserve Bank of Peru (BCRP) to April 28, which shows that inflation would be between 4.80% and 6.00%.

Reference rates

At the same time, Citi expects that after a rise in reference rates, which have been maintained for 3 consecutive months at 7.75%, the BCRP will begin to lower them in June. “Peru rose 50 basis points in one session. For the bottom we should expect a similar rate of cuts,” said Esteban Tamayo, economist for Colombia and Peru at Citi.

For his part, the economist Juan Carlos Odar indicated that the increases or decreases will also depend on the growth of economic activity and the reductions in interest rates at the US Federal Reserve (FED). In addition, he specified that “a drop or rise of 25 basis points has a greater impact on mortgage and corporate credit than on consumer credit.”

keys

2024. The BCRP estimates that only by 2024, a reduction in inflation could be seen, which would be between 3% and 4%. For its part, Citibank expects it to reach 2.5% next year.

GDP. Citi expects the economic growth of Peru this year is 2.5%. This is the same projection maintained by the Ministry of Economy.