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Lima CPI Falls 0.09% in May, Annual Inflation Reaches BCRP Target

PERU
  • Consumer prices surprised significantly to the downside in May, falling 0.09% m/m against an estimate of +0.12%, according to the National Statistics and Information Institute (INEI). This translated into the annual rate coming in at 2% y/y, reaching the mid-point of the central bank’s target range.
    • Lima May Consumer Prices Fall 0.09% M/m, Est. +0.12%
    • Lima May Consumer Prices Rise 2.00% Y/y, Est. +2.22%
  • Downside risks to expectations had already been flagged late last week when BCRP Governor Velarde hinted that the monthly inflation rate would be around zero percent. The data bolsters the likelihood that the BCRP will continue cutting the reference rate on June 13.
  • Finance Minister Jose Arista recently criticised the central bank for easing monetary policy too slowly. However, Velarde then said that increasing the pace of cuts would be of limited help because the economy is already growing as much as it can in the current scenario.

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