Inflation will fall below 8% this month, according to BCR.

Despite the recent economic turmoil, the index Prices the consumer will be presented with a significant drop at the end of April, according to the forecasts of the Central Reserve Bank (BCR).

This month inflation the annual rate will fall below 8% due to the normalization of some prices. BCR Monetary Policy Manager Carlos Montoro noted that it was already observed in March that food prices such as potatoes were reversed and there would now be a normalization of annual inflation.

“In April, we expect inflation to be below 8% (…) In January and February, we observed that monthly inflation was at a low level, below 0.3%, and in March an increase to 1.25%, which should was certain factors on the side seasonality, due to higher education prices, as well as higher prices for some foodstuffs. In April, we no longer have the influence of education,” he commented during the presentation of the March monetary program.

Montoro noted that Peru’s inflation persists despite the international fall in food prices, as we are facing special factors such as supply constraints due to social conflicts and rains.

However, he clarified that these impacts due to rainy they will be temporary, and even a larger fall in inflation is forecast to be reported in June.

“We hope that in the coming months, for example, in June, inflation will also decrease significantly, and gradually we will approach the target range,” he said.

It should be remembered that BCR predicts that inflation in Peru, it will reach the target range of 1% to 3% in the last months of this year “due to the moderate impact
international food and energy prices, the elimination of supply shocks in the agricultural sector, and lower inflation expectations for the remainder of the year.”

How is economic activity going?

The BCR spokesman indicated that the Peruvian economy would have had zero growth in the first quarter.

As indicated, January was the most affected month, while February and March showed less impact.

Although Montoro indicated that in February economic activity it would be better than in January, the impact of focused conflicts would be 2%.

“The greatest impact of social conflicts occurred in January. For February, the impact of conflicts located in the south is estimated at about 2 percentage points, and economic activity is expected to be at a better level than in January; however, small reduction in the second month of the year,” he said.

For March, this indicates that the impact of social conflicts and rains will be less, and it is estimated that both impacts will be 1% below the growth of the Peruvian economy.

Now he BCR For the second quarter of the year, from April to June, the Peruvian economy is forecast to grow by 2.8%, and at the end of this year 2023, the economy will grow by 2.6%.