INEI: inflation to May fell to 7.89% in Lima, the lowest in 14 months

Annual inflation to May fell to 7.89% in Metropolitan Lima, the lowest in 14 months, while only in May it reached 0.32%, according to the National Institute of Statistics and Informatics (INEI). Thus, in the fifth month of the year accumulates 2.67% of this indicator.

Despite the setback, reaching the target range is unlikely and to some extent not desirable, said Juan Carlos Odar, director of Phase Consultores. “It could happen if we go into such a severe recession or that stores, vendors start lowering prices because no one buys, but that’s not something you want. So, I would say that under a reasonable scenario we are in another year without meeting the inflation target“, I note.

In this way, Odar explained that by June we would already have reached the accumulated 3%, so that, in the following months, inflation would have to reach 0% to reach the goal, which is unlikely considering that July and December are months in which inflation is usually high. With 2023 it would already be three years that the goal is not reached, which is between 1% and 3%.

While the Ministry of Economy and Finance (MEF) still expects it to reach 3% by the end of the year, the specialist consulted anticipates that this indicator will be above 4%.

The result for May was mainly influenced by the price variation observed in the consumer divisions: food and non-alcoholic beverages (0.98%), followed by restaurants and hotels (0.69%) and miscellaneous goods and services (0. 38%). Meanwhile, the lodging, water, electricity, gas and other fuels (-0.75%), and transport (-0.31%) divisions had a negative influence. These five divisions explain 85% of the result for the month, reported the INEI.

The north of the country hit by the climate crisis

Inflation at the national level in the month of May reached 0.31% and there is 13 cities that are above this number. Among them are Chimbote, Chiclayo and Moyobamba. But what stands out the most is that Trujillo is the only region with the annualized indicator that exceeds two figures. It stands at 10.89%. Ica (9.59%), Cajamarca (9.25%) and Tacna (8.75%) follow.

The intense rains in April, which continued in some cities in May, caused the loss of crops and had an impact on supplies, the document explained.

It should be noted that, next Thursday, June 8, the Central Reserve Bank of Peru (BCRP) will evaluate monetary policy taking these data into account. Although the entity has said that it could continue raising the reference rate, which has been at 7.75% since the beginning of the year, Odar points out that it is likely that it will remain so for “some time”.

Food prices remain high

By the fifth month of 2023, of the 586 products that make up the family basket, 402 had prices rise, 96 fell and 88 remained as they were.

The products that increased their costs the most were Chinese onion (66.61%), tomato (37.23%), coriander (29.09%), cucumber (21.71%), spinach (21.08%) and others. .

Fish and shellfish (6.6%), such as mackerel (15.5%), bonito (14.9%), horse mackerel (13.3%), were also on the rise due to abnormal waves that led to a lower income of these products to the markets.

The word

Juan Carlos Odar, director of Phase Consultants

“We would close a little above 4%. So, the current situation is inflation still outside the range, but converging to it, they are already 3 consecutive years, but each time the deviation is smaller”.