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BBVA on Peru Inflation and BCRP

  • The Consumer Price Index of Lima registered a variation of 0.78% M/m in December. This is mainly a result of higher household fuel prices and the seasonal increase in the price of meat and transportation.
  • In Y/y terms, inflation increased again reaching 6.4% in December (November: 5.7%). Inflation excluding food and energy, a trend measure of price changes, has maintained an ascending trajectory and went from 2.9% in November to 3.2% in December.
  • BBVA expect inflation to remain at high levels in the following months, slightly above 6.5%, and above the target range of the Central Bank during the rest of the year, closing around 3.4%.
  • This forecast considers that the increase in wholesale prices will continue to be passed on to consumers and that unanchored inflation expectations will generate some inertia in headline inflation.
  • In this context, the Central Bank will probably continue to tighten the monetary policy stance in the following months, orienting it towards a higher neutral level, in the short term by making adjustments in the policy rate of a magnitude similar to the that was observed in the last months of 2021 (50bp).

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