Fin Min: Peru will mitigate fuel price hike to avoid inflation outbreak

14:30 | Lima, Jul. 6.

Economy and Finance Minister Waldo Mendoza on Tuesday affirmed that Peru has a compensation fund to mitigate the current increase in fuel prices witnessed in the international arena.

"We have a policy to alleviate international inflation, in such a way that fuel prices across the country will see a slight increase, but it will not be significant because it will be mitigated by this fund," he stated.

Mendoza stressed the importance of focusing on headline inflation, that is, on the behavior of prices as a whole. 

"Fortunately, headline inflation has remained controlled for more than two decades at around 2% and 3% per year. In other countries, such as Argentina, annual inflation stands at 60%, while it stands at 2,000% in Venezuela. Besides, in the 1980s, annual inflation in Peru stood at 7,000%," he explained.

In this sense, the MEF's head highlighted the work carried out by the Central Reserve Bank (BCR)

"We should not worry in that sense. Obviously, the prices of some products can be raised above said level, as is the case of fuels, but headline inflation is controlled," he said.

World economy

The minister remarked that the global economic recovery will be very strong this year in particular.

"World production is estimated to grow around 6% this year, which is good news for us, as this is the highest rate since 1973. However, this implies that world consumption will also grow significantly, and this may lead to the increase in some prices, as in the case of fuels," Mendoza explained.

He went on to say that Peru is an oil importing country, so this global increase will inevitably lead to a rise in domestic prices.


Published: 7/6/2021
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