2026/07/01 | Andrés Pérez M., Vittorio Peretti, Andrea Tellechea & Ignacio Martínez
According to the National Institute of Statistics and Informatics (INEI), consumer prices in Lima rose by 0.23% m/m in May, above the market consensus of 0.06%, and our call of 0.10%.
The upside print was mainly driven by a partial reversal in food prices (+0.67%; -1.69% in May), mainly due to fish prices. Amid global developments in the middle east, gasoline and diesel prices dropped by 6.5%. Core inflation excluding food and energy rose by 0.08% m/m in June (similar to the May print).
On an annual basis, headline inflation ticked up by 10bps to 4.01% YoY, remaining above the 1-3% target range for a fourth consecutive month. Accumulated inflation so far this year sits at 3.79%. Meanwhile, core inflation excluding food and energy edged up to 4.5% YoY in May (2.2% in February), marking its highest level since May 2023. Transportations services are up 18.3% YoY.
Sequential inflation pressures start to ease. Headline inflation increase by 7.4% QoQ (SAAR), down from the cycle peak of 9.6%, while core inflation increased 8.7% QoQ (SAAR; 1pp down from the peak).
Our take: We forecast an above-consensus YE CPI print of 4.4%. The disinflation process ahead is likely to remain gradual amid persistent El Niño risks. Against this backdrop, and with activity holding up, we expect the BCRP to resume its tightening cycle, delivering a cumulative 50bp in hikes by year-end, taking the policy rate to 4.75%.