He Central Reserve Bank (BCRP) confirmed that inflation in Peru – which fell to 7.89% in May in Lima, the lowest in 14 months – will return to the target range of 3% only in 2024, and not before the end of the year as reported in previous meetings .
During the presentation of the Monetary Program – June 2023, the Central Manager of Economic Studies of the BCRP, Adrián Armas, acknowledged that there is a delay in the moderation of prices of some foods, such as chicken and eggs, but that they should fall as prices “idiosyncratic” reasons dissipate in the local market, such as bird flu, in addition to the high cost of commodities to sustain this industry, such as corn.
“We believe that food prices will begin to correct and the rate is expected to be close to the target range by the end of 2023 […] Starting from a current 7.9%, we expect year-on-year inflation to drop significantly in the following months and correct itself to the target range next year,” he highlighted.
Regarding the increase in the price of other foods, the official stated that a progressive reduction is expected in a scenario of low social conflict and better agricultural campaigns, far from the floods of the first quarter. However, he pointed out that they remain cautious in the face of a new global El Niño Phenomenon (FEN).
In this sense, Armas said he expected a downward trend in year-on-year inflation to continue in the coming months, which would be more marked in July and the following months “based on what we have seen so far.”
“So, we would already expect that some of the affected products, such as chicken and eggs, will have a correction, and that this will continue. Also, let’s remember that, in the food part, in a weak or moderate FEN scenario, we can still have in the remainder of the year, greater agricultural production – planting with lower cost fertilizers – and that would correct food prices,” said the manager of Economic Studies.
“We expect further corrections -reversing the evolution of prices- to begin in the first week of this month of June. Everything would seem to indicate that this June we will have the lowest monthly inflation rate so far this year“, he added.
Source: Larepublica
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