Inflation in May fell to 2%: prices could take time to fall

The variation of the Consumer Price Index (CPI) in metropolitan Lima decreased by 0.09% in May and reached an interannual variation of 2%, its lowest level since December 2020 (1.97%), according to the National Institute of Statistics and Informatics (INEI).

The fall in inflation is mainly explained by lower prices in food and non-alcoholic beverages, with a variation of 1.86% in the last 12 months. Along these lines, fish and seafood decreased by 9.71%, oils by 9.60%, meats by 6.06%, vegetables, legumes and tubers in general contracted by 5.85%, bread and cereals by 2.25%, milk, cheese and eggs at 1.96% and coffee, tea and cocoa at 0.03%.

Although the inflationary reduction is a positive phenomenon, within the target range set by the Central Reserve Bank of Peru (BCRP) – which ranges between 1% and 3% – economist Armando Mendoza explained that we are still in a preliminary stage because Both the recession and high levels of poverty continue to limit Peruvians’ access to the products in the basket.

Mendoza maintains that the economic slowdown that has been going on for a couple of years makes people consume less, which could explain the reduction in inflation and is worsened by the contraction of income. It is essential to mention that this does not mean that prices will drop substantially. “Prices go up by the elevator and salaries by the stairs and that is what has happened in the last two or three years. Prices skyrocketed and Peruvians’ income did not grow at the same pace. If prices go down, it will be in the long term,” he told La República.

The key

Reading. The president of the BCRP, Julio Velarde, estimated that inflation this year will close at 2.2%. Regarding the progress of the economy, he insists that it will grow 3.1%.