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BBVA On The Lower Than Expected Lima CPI Data and BCRP

PERU
  • Although January is a month in which inflation is seasonally low, it was even lower than BBVA had anticipated (0.20% m/m).
  • The result was explained, mainly, by the seasonal correction in the prices of transport and some foods (poultry meat, for example) after the high demand that they usually register during the end-of-year holidays, aided by PEN appreciation, and despite the strong increase in fruit prices, something that is also usual in this part of the year.
  • BBVA estimate that inflation in year-on-year terms will remain at high levels in the coming months, even closing the year outside the central bank's target range (around 3.4%).
  • The persistent inflation above the target range, the de-anchoring of inflationary expectations, and the tendency of the negative output gap to close (according to their estimates, it will be practically closed in 2023) lead BBVA to anticipate that the Central Bank will continue tightening the monetary position in the coming months, directing it towards a level even above the neutral, placing the policy rate around 4.50% before the end of H1, 2022.
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