Overall inflation closed at 1.5% at the end of 2025, remaining comfortably below the midpoint of the
's inflation target range (2%), according to the weekly report from Scotiabank's Economic Studies Department.
Thus, 2025 recorded the lowest inflation level in eight years, since 2017, when it stood at just 1.4%, Scotiabank's Monetary Economics and Financial Markets Manager Ricardo Avila stated.
"Throughout 2025, inflation in the services sector, which accounts for 62% of total inflation, showed a clear downward trend, decreasing from 2.8% in 2024 to 0.9% by the end of last year," Avila explained.
"This significant decline was mainly driven by the communications sector, due to lower tariffs for phone services, and by the housing, water, electricity and gas sector, linked to the strengthening of the Peruvian sol, which contributed to reducing electricity and accommodation rates, as well as lower LPG tariffs, in line with the decline in international oil prices," he added.
The officer said both sectors ended the year with negative price variations, at -1.5% year-on-year and -2.3% year-on-year, respectively.
"Local inflation stood at 1.9% at the end of 2025, above overall inflation, reflecting the solid performance of domestic demand. Imported inflation offset the increase in local inflation, posting a -3.6% year-on-year rate at the close of 2025 and remaining in negative territory since May," Avila indicated.
"The products driving this negative variation were oil, which fell by 20% over the year, and certain soft commodities such as wheat and corn, which declined by 8% and 4%, respectively. Core inflation—the trend component that excludes food and energy—rose by 1.8% over the year," he added.
Outlook
The Scotiabank officer said January inflation is likely to be negative, reflecting a price correction following December's seasonal increases, which would keep annual inflation around 1.5%.
"Regarding the announced 12% increase in water tariffs for residential customers, as set by the National Superintendence of Sanitation Services (Sunass), we estimate it would have an impact of 0.2 percentage points on annual inflation and would be reflected in February," Avila explained.
"We maintain our forecast of 2.2% for retail inflation in Lima by the end of 2026; during the first half of the year, it would remain below the midpoint of the inflation target range (2%)," he added.
Scotiabank noted there is a wide dispersion in inflation outlooks for 2026. According to LatinFocus, which compiles around 40 forecasts, the expected inflation range lies between 1.9% and 2.7%, with an average of 2.2%.
"On the Central Reserve Bank survey side, published on January 9, the range is much narrower, standing between 2.1% and 2.2%," he indicated.
(END) CNA/MVB