BBVA Research has forecast that inflation will continue to decline in Peru, supported by a high year-on-year comparison base and a restrictive monetary stance.
"Taking into account the downward surprise in inflation last October, and the more pronounced weakness of the product, despite the risks posed by conflict in the Middle East (on the international price of oil) and a strong El Niño phenomenon, the inflation projection for 2023, currently at 4.1%, has a downward bias," the private entity indicated.
Surprise
BBVA Research commented that the Metropolitan Lima Consumer Price Index (CPI) decreased 0.32% last October and thus surprised the consensus of analysts who, according to the Bloomberg survey, had anticipated an CPI increase of 0.19%.
During that month, the decrease in the prices of some foods stood out after the impact of the supply shocks they had faced in previous months dissipated (for example: lemon and onion).
"On the contrary, the prices of imported or U.S. dollar-denominated goods increased, such as automobiles, air tickets, and rentals, increased. Although, given this result the interannual inflation rate still remains above the BCR's target range (between 2% and 3%), the decline that began last February was accentuated after going from 5% in September to 4.3% in October," the entity explained.
BBVA Research added that the main components of inflation continue to decline, which is partly due to a high year-on-year comparison base (inflation in October 2022 was 0.35%).
Thus, in year-on-year terms, this inflation indicator fell to 3.3% from 3.6% last September.
The decrease was greater than that observed over the two previous months because the base effect was also greater. An improvement of 0.5% was reported in October 2022.