Inflation is like economic cancer, ‘really destructive’, specialist warns

Pedro Grados Smith, Director of the Economics Program at the University of Lima, defined the concept of inflation and compared it to cancer economy, as it is usually self-destructive. Similarly, he clarified that conflicts occurring around the world could end up affecting countries around the world, as in the case of Peru.

“Inflation is a fundamental variable, something like a cancer of the economy. It is truly self-destructive. That is why it is important to control inflation and this is the main priority of the Central Bank. How are you? Unfortunately, over the past two years it has grown significantly, but for different reasons. Last year they were international causes. And this shows us what a Puno or Cuzco resident has to do with the war between Russia and Ukraine: last year the price of bread went up because Russia and Ukraine are within the main markets for wheat, so there were fewer imports, the price went up; therefore flour has risen in price and bread has risen in price. The war on the other side of the world affects us. The world is interconnected,” he said in Air Rotary.

“But this year, prices are not rising due to external factors. Rather, these elements are reduced. They are rising due to social and political upheaval, especially in regions like Puno and Madre de Dios, which had the highest inflation rate in January. Because? After all, it’s the same. The supply is decreasing because the products are not coming, the prices are going up, and this is affecting the family basket,” he added.

What percentage of inflation is acceptable?

Smith degrees He referred to the fact that the maximum annual inflation should not exceed 3%, as this could create a situation of instability and reduce the purchasing power of the population.

“The concept of inflation is a rise in prices. It could be within the normal range of 1% to 3%, which is what it was supposed to be, or it could be the 1990 frenzy in Peru, where it rose over 7000%. Young people don’t remember this and I hope it never happens again,” he said.

“Inflation is the strongest and most complex tax of all. What does a tax do? It reduces my purchasing power, my purchasing power. to be able to buy the same thing. So inflation affects everyone, and to a greater extent those who have a fixed salary, because their salaries do not increase with inflation. inflation is very bad for any economy at all” finished.