Inflation reached 8.87% in the midst of protests, what to expect in the coming months?

In 2023, national inflation began to rise to 8.87%, one of the highest price increases in more than 20 years, according to the National Institute of Statistics and Informatics (INEI).

Although it was expected that price index At the beginning of the year, Monica Muñoz Najar, an economist at the Development Research Network, notes that the blockades have complicated the situation.

“It was expected that in December-January it would begin to correct downwards, but the demonstrations made it difficult. The blockade of roads did not allow the delivery of goods to different regions, and this gives rise first to a rise in prices, and then a second measure of shortage (…) Chicken reached, for example, in Cuzco 17 soles per kilogram, in Loreto 15 soles, in Apurimac up to 20 soles ” he recently commented.

In 13 out of 26 cities, the increase in prices is even higher than the national average; Puerto Maldonado, Cerro de Pasco and Puno. Only in Puerto Maldonado inflation exceeded 15%.

However, in metropolitan Lima, the speed Prices it was 8.66%, below average and much less than in a number of regions, why is that? Economist Pedro Grados Smith explains that the capital receives goods from different parts of the country that have not caused problems on the roads.

“It is true that Lima is supplied from other regions, but Lima has not been completely blocked. Puerto Maldonado has only two routes: goods come from Brazil or goods come from Cusco. Lima has many supply sources, north, center and south. The center has been locked down for only a few days and the north has also been sporadic, even the supply of food to the wholesale markets, although they were affected, were not affected to a large extent,” he said.

Macroconsult economist Elmer Kuba also notes that another part of Lima’s supply comes from imports, as is the case with fuelwhose international prices have fallen.

“Lima is short of supplies and much of its consumption comes from imported goods. not everything is local consumption, most The consumer price index comes from outside,” he explained.

So far, price cuts have been reported nationally for LPG, gasoline and diesel, as well as products such as mackerel, parrot, airline tickets and lemon.

But the foods that saw the highest price increases were legumes like green peas, vegetables like tomatoes, and tubers like potatoes.

What can we expect now?

Economist Melvin Escudero argues that with lower world prices, inflation should already be on the decline, but will we reach the 1% to 3% target this year that the Central Reserve Bank expects?

“We should already be with the reduction scheme. If we skip these questions checkpointbetween February and March we should have a more normal inflation rate (…) We will probably close this year, if all goes well, at an inflation rate between 4% and 5%, but if the protests and roadblocks continue, definitely difficult to achieve”, – he said.

For their part, both Grados Smith and Cuba agreed that it was unlikely that Peru would end 2023 with inflation below 3% due to political and social issues.