Itaú BBA - PERU – Inflation accelerated in September

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PERU – Inflation accelerated in September

October 1, 2020

However, inflation continues to be below BCRP inflation target

Inflation was above market expectations in September. CPI posted a month-over-month rate of 0.14% (from 0.01% a year ago), above our forecast of -0.11% and market expectations of 0.02% (as per Bloomberg). The figure was mainly driven by upward pressure from household living costs (0.53%) and transportation and communication (0.13%) due to an increase in energy prices. Likewise, food and beverages registered a price increase of 0.09%. 

Inflation in September continues to be below central bank’s target of 2%. Annual headline inflation reached 1.82% in September (from 1.69% in August), while core inflation (excluding food and energy) stood at 1.83% (from 1.79%). We note core inflation continues to be pressured by medical product prices amid the outbreak, which registered an annual growth rate of 3.17% in September (from 3.02% in August). A recovery in energy prices is also exerting upward pressure in headline inflation: electricity and fuel for housing (5.92%, from 4.78%) and gasoline & lubricants (-12.87%, from -15.85%).

At the margin, headline and core inflation also accelerated. The seasonally-adjusted three-month annualized variation of the CPI was 1.86% in September (from 0.91% in August), while core inflation (excluding food and energy) stood at 1.49% (from 1.31%).

We expect inflation at 0.9% by the end of 2020.  A wide negative output gap will put downward pressure on prices.

Julio Ruiz




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