Inflation in metropolitan Lima closed 2021 at 6.43%. The figure represents an increase of 0.78% between November and December, according to the National Institute of Statistics and Informatics (INEI).
The monthly variation is the third highest in 2021 after August and March, when it registered an advance of 0.98% and 0.84%, respectively.
Meanwhile, the result at the end of the year is slightly above the 6.2% projection made by the Central Reserve Bank of Peru (BCRP). In addition, it is the highest rate of the last 13 years, since since 2008 (6.65%) it did not exceed six points.
In 2021, the rise in the Consumer Price Index in metropolitan Lima was mainly driven by the increase in the rental of housing, fuels and electricity (13.27%), as well as in food and beverages (7.97% ).
The products that increased the most in 2021 were vehicular LPG (78%), bottled vegetable oil (63.5%), national airfare (59.4%), domestic LPG (51%), gasoline (46.8%) , gutted chicken (24.3%), among others.
Optimistic projections
However, despite the high figures of last year, the expectations of the BCRP and the Ministry of Economy and Finance (MEF) are optimistic for 2022.
In this sense, the latest inflation report by the BCRP “projects that year-on-year inflation will return to the target range (between 1% and 3%) by the end of 2022 with a clear downward trend during the second semester.”
The fall would be due to the dissolution of the effects of the increase in fuel prices, food and the exchange rate.
“This projection considers that inflation expectations would gradually decrease towards the target range, in a context of gradual closing of the product gap and withdrawal of the monetary stimulus ”, adds the report of the entity.
The monetary authority estimates that this year inflation will close at 2.9%, while for December 2023 it will fall to 2.1%.
Along these lines, the head of the MEF, Pedro Francke, highlighted the projections made by the BCRP for the coming months.
“It is a transitory effect. Inflation will return to its target range in the coming months, which is capped at 3.0% inflation, which is what we have maintained for more than a decade, “he said.
He also stressed that the rise in prices is an international phenomenon.
“We understand the effect it has on most families in Peru. However, it is understood that it is an international phenomenon ”, added.
Indeed, according to Julio Velarde, president of the BCRP, the expansion of inflation in Peru is “the product of the increase in the prices of imported goods and the depreciation carried out.”
Main sectors that drove rise
The Consumer’s price index Metropolitan Lima showed monthly increases in the eight major consumption groups, according to the INEI.
The four items with the highest variation were: transportation and communications with 1.70% and rental of housing, fuels and electricity (1.57%).
It was followed by food and beverages (0.72%) and furniture, fixtures and home maintenance (0.61%).
Together, these sectors represented a contribution of 0.73% in the variation of 0.78% of the general index.
On the other hand, the December result showed a rebound compared to the previous three months: November (0.36%), October (0.58%) and September (0.40%).
Data
Inflation. It is the generalized and continuous increase in prices, which is equivalent to the devaluation of the currency with negative consequences on economic activity.
Target range. It is an annual objective established by the BCRP, in such a way that inflation should not be less than 1% nor greater than 3%.
The word
Pedro Francke, Minister of Economy and Finance
“It is a transitory effect, inflation will return to its target range in the coming months, which is capped at 3.0% inflation, which is what we have maintained for more than a decade ”.
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