Peru's Central Bank says worst of inflation has already passed

"We are on a downward trend, but the reduction is quite moderate, and we expect to see the largest inflation reductions as of March because we are waiting for the strong impact that our economy has received —from the increase in prices of food and inputs to prepare domestic foods, basically grains— to dissipate," BCR Economic Studies Central Manager Adrian Armas stated.

"Fortunately, the worst part has already happened. This occurred in June, when inflation (in annualized terms) peaked at 8.8%," Armas remarked.

"The Central Reserve Bank remains vigilant to ensure the return of inflation to the target range (between 1% to 3%)," he added.

The BCR official underscored that the 12-month inflation rate fell from 8.53% in September to 8.28% in October, while the 12-month core inflation rate increased from 5.51% in September to 5.72% in October.

"A clear downward trend in inflation is expected to emerge as of March next year. The current projection indicates that inflation will return to the target range in the second half of 2023," he stated.

Armas reiterated that inflation is a global phenomenon, which is why central banks have raised their interest rates since last year, based on their own macroeconomic conditions.

"The significant increase in international energy and food prices since the second half of last year, accentuated by international conflicts, has led to a sharp increase in global inflation rates in magnitudes not seen in many years and towards significantly higher levels to the inflation targets of central banks, both in advanced economies and in the region," he said.

According to the BCR economic studies central manager, the Central Bank's Board is particularly attentive to new information on inflation and its determinants, including the evolution of inflation expectations and economic activity, to consider additional changes in the monetary stance. 

"The Board reaffirms its commitment to adopt necessary actions to ensure the return of inflation to the target range over the forecast horizon," he pointed out.

(END) CNA/JJN/RMB/MVB