Inflation in Peru ended 2024 in the middle of the
target range, with BBVA Research projecting this macroeconomic indicator to close at 2.5% by the end of 2025.
"The Consumer Price Index for Metropolitan Lima (CPI) increased 0.11% m/m in December 2024, below the expected consensus from analysts (Bloomberg: 0.30%)," the financial institution stated on Monday.
"The result for the month is mainly explained by the seasonal increase in transportation prices, associated with the end-of-year festivities; on the other hand, food prices decreased, particularly of fish, tubers, and eggs," it added.
With this result, BBVA Research indicated that the interannual inflation rate in December was 2% (November: 2.3%), closing the year at the center of the BCR's inflation target range (2% +/- one percentage point).
"It is worth mentioning that inflation had not closed the year within the target range since 2020," the financial institution underscored.
Likewise, it was noted that in 2024, the component that showed the greatest advance was Education (5.1% year-on-year), followed by Transportation and Alcoholic Beverages (both at 3%), while the Food and Non-alcoholic Beverages category (which holds the greatest weight within the index) closed 2024 with a modest increase year-on-year increase of 0.1%. This came in a year when weather conditions normalized, following El Niño phenomenon that impacted Peru for much of the previous year.
The financial institution explained that the component of the consumer basket excluding food and energy —a more trend-based measure of the pace at which prices are rising in general— has been an important factor in monetary policy decisions.
"In December, this index rose 0.40% m/m, resulting in a year-on-year variation of 2.6%, similar to that of the previous month. In a broader time perspective, this rate is lower than the average of the last 10 years (2.9%) and not much different from the average of the past 20 years," it explained.
2025 Projections
BBVA Research estimates that for the first quarter of this year, in a context of relatively normal weather conditions (according to forecasts from specialized entities) in terms of their macroeconomic impacts, with economic slack nearly closed, and anchored inflationary expectations, inflation will not stray far from the center of the target range.
"We continue to expect the year to end at around 2.5%, a forecast that incorporates the effect of a low year-on-year comparison base towards the last months of 2025," the financial institution indicated.