Itaú BBA - PERU – Inflation surprised to the upside in November

Macro Latam

< Back

PERU – Inflation surprised to the upside in November

December 1, 2020

We now expect end of year 2020 inflation at 2.0% (compared to our previous forecast of 1.6%).

Inflation was above market expectations in November. CPI posted a month-over-month rate of 0.52% (from 0.11% a year ago), above our forecast of 0.04% and market expectations (as per Bloomberg). The figure was driven mainly by upward pressure from household living costs (1.38%) mainly due to an adjustment in electricity tariffs, while food and beverage stood at 0.88%.

Headline inflation in November stood above central bank’s target of 2%. Annual headline inflation reached 2.14% in November (from 1.72% in October), driven mainly by food prices (2.81%, from 1.93%). Core inflation, which excludes food and energy items, increased by less (1.75%, from 1.68%), but still pressured by medical product prices amid the outbreak, which registered an annual rate of 3.46% in November (from 3.26% in October). 



At the margin, headline and core inflation also accelerated. The seasonally-adjusted three-month annualized variation of the CPI was 3.96% in November (from 1.33% in October), while core inflation (excluding food and energy) stood at 2.26% (from 1.94%).



We now expect end of year 2020 inflation at 2.0% (compared to our previous forecast of 1.6%). Still amid a wide negative output gap, we expect inflation to remain subdued during 2021 (we expect it at 1.9%). 

 

 



< Back