BCR Include High Urea Costs in Inflation Forecasts

What will happen to lack of fertilizer and the government’s fourth failed buy attempt? Without a doubt, this issue, which directly affects food prices, cannot be resolved, and the Central Reserve Bank is well aware of this, preparing its forecasts with fertilizer as an indicator to measure price increases in the next months.

“BCR has in its forecasts (from inflation) the effect of higher fertilizer and urea costs that you will see in the country. Therefore, monthly rates are still expected to include this impact,” Adrian Armas, chief manager of economic research at the Central Reserve Bank (BCR), said today.
Some farmers have already announced price increases of up to 50%, which will be reflected in local markets; however, BCR expects lower monthly rates as well as year-on-year inflation, which rose from 8.81% in June to 8.4% in August.

“However, the monthly inflation rate will still be high, which is explained, among other things, by the increase in food prices due to the effect of fertilizers.”, he said at today’s presentation of the BCR monetary program for September.

BCR accepts price increase

Armas admitted that there is an increase in prices for fertilizers and fertilizer which have risen by 24% so far this year (albeit lower than in June), which has affected the cost of producing some food products and raised prices for ordinary citizens.
“At the global level, it is observed that in recent months there has been a decline in world prices on average, although they remain at levels well above normal situations,” said Adrian Armas.

After the process of purchasing fertilizers was discontinued, some unions began to announce price increases, for example in Cajamarca, where the Users’ Council announced that a kilo of potatoes could be worth S/7, as almost 90% of their crop would suffer from lack of fertilizer.