Inflation starts to recede, why is that?

In July, annual inflation reached 9.28% nationally and 8.74% in metropolitan Lima, a slight decline from what was recorded in June, the National Statistical and Informatics Institute (INEI) said.

Nonetheless Prices for the public is still high, why is that? Economist and professor at ESAN University Carlos Gonzalez explains that this decline in price growth is due to the fact that imported inflation has decreased.

“We no longer have this onslaught of increase Prices oil, wheat, corn, food products that we import. For example, wheat and corn, the maximum value was reached in May and since then they have been declining, so that the import component in the last months of this year is no longer fixed. Most of all (affecting inflation) we had internal factors, such as anomalous behavior of the sea, which affected fisheries and fuel supplies,” he told RPP.

When could Peruvians see more price cuts?

The Central Reserve Bank (BCR) has already predicted a decline in inflation for July due to lower world prices for wheat and corn.

Despite this, products such as bread, which has wheat among its raw materials, and chicken, which requires corn to produce, continued to grow both in Lima and in the provinces.

“Unfortunately, the transfer does not happen instantly, there is always a delay of at least one month between the change in the international price and its effect on domestic products, especially those that require a certain degree of transformation, such as wheat, which is turned into flour. “, says Gonzalez.

For her part, Development Research Network (Redes) economist Monica Muñoz Najjar notes that, according to BCR data, next year alone inflation will return to the target range, so prices can be expected to remain at their high levels until at least December.

But why does it take time for international price cuts to become public knowledge?

“During the first and second weeks of June international quotes They fell. This will not necessarily be immediately reflected in the prices we pay because let’s remember that we pay for these imports in dollars and the exchange rate in Peru has risen so if you have a higher exchange rate it’s the same even if the price may fall internationally, this will not be immediately reflected in the price in sols. On the other hand, we have the time factor, a month has already passed when prices are slightly lower, let’s remember that internationally, prices have not yet returned to 2019 levels, even 2020, prices are still high Muñoz Najar explained .

Some of the products whose prices continue to rise despite their falling world prices are fuel. Internationally, oil prices fell more than 8% in July, but in Peru, gasoline prices rose more than 3%.

Macroconsult economist Diego Rosales argues that, despite what the INEI report says, there have already been price cuts in the last weeks of July for some fuel.

“In this month’s inflation report, although we saw an increase in gasoline and diesel, we must bear in mind that they are significantly lower than last month, so fuel inflation was lower, inflation was still there, but significantly lower than last month. previous months, and what we should expect by August is a slight decrease in prices for fuel”, accurate.

The INEI report also points out that prices have risen for day-to-day expenses such as tickets, which have risen due to traffic stops and demand for travel, or restaurant menus, which have risen due to higher costs for basic food preparation items.

However, others products showed a decline last month, among them eggs and sugar, which reached their maximum level in previous months.