Inflation one step away from normalizing: it reached 3.02%

The annual Consumer Price Index (CPI)—an academic term used to measure inflation—reached 3.02% in January in metropolitan Lima, according to the National Institute of Statistics and Informatics (INEI).

This rate, despite measuring only the capital’s situation, is the barometer to measure the performance of prices in the Peruvian economy. Thus, it reached its lowest value since May 2021, and places us one step away from the target range established by the Central Reserve Bank (BCRP): between 1% and 3%.

Juan Carlos Odar, director of Phase Consultores, comments that the inexorable return to the target range that will be seen in February will favor the home economy because people’s real income will gradually recover, which will also boost productive activity after the recession.

“As inflation subsides, we will see that the trajectory of real income will normalize. It will be favorable for the consumer because they will recover their purchasing capacity and strengthen the rebound (of GDP),” commented the economist for La República.

The price of beer went up

During the first month of 2024 – when inflation barely rose 0.02% – there was a greater variation in the prices of alcoholic beverages, tobacco and narcotics (0.59%) due to the increase in beer (0.9%) , whiskey (0.6%) and blonde cigarettes (0.3%).

This is followed by various goods and services (0.28%) due to higher costs in hairdressing and beauty establishments (0.5%) along with the increase in shaving cream (1.0%), cologne for women (0.9%), deodorants (0.8%), talcum powder (0.7%), sanitary napkins, toothbrush and baby toiletries (0.5%).

And in restaurants and hotels, the increase in inflation was 0.25% due to higher prices for sandwiches and menus (0.7% and 0.2%, respectively).

In year-on-year terms, a more pronounced increase was recorded in education (6.40%), restaurants and hotels (6.16%), miscellaneous goods and services (4.12%), and alcoholic beverages and tobacco (3.90%).

By products, the greatest price variation was observed in Chinese onion (79.96%), celery (28.63%), mandarin (21.27%), papaya (17.36%) and pineapple (16.90). %).

While prices fell more in hake (18.95%), corn (18.28%), strong avocado (13.99%), pickled yellow pepper (12.91%) and national airfare (12. eleven%).

Reference rate in March will fall further

In January, the reference interest rate was reduced by the BCRP to 6.50%, as a result of the inflationary decline. With the arrival of the target range, Odar maintains that the central bank will continue to be cautious until this month and cut the rate by 25 basis points, but starting in March it will undertake a more aggressive reduction of 50 basis points until reaching an average of 4%. which will make credits cheaper in the market.

It should be added that the BCRP recognized that the reference rate in Peru is the lowest in the region despite the historical escalation it applied in the midst of the COVID-19 pandemic.

National inflation fell below 3%

The INEI reported that interannual inflation at the national level reached 2.95%, below the target range set by the BCRP.

In cities such as Moyobamba, Tumbes, Tacna, Piura, Abancay, Huancavelica, Moquegua, Cerro de Pasco, Cusco, Iquitos, Pucallpa and Puno they are also on this same page. Puerto Maldonado reports a contraction of 2.46%.