Inflation rises in March from February

Latest reading: Consumer prices in Lima were up 3.8% on a year-on-year basis in March, following a 2.2% rise in the prior month. March's reading was the strongest since October 2023 and exceeded the ceiling of the Central Bank’s 1.0–3.0% target range for the first time since March 2024. Relative to the previous month's figures, there were higher price pressures for food and beverages (+5.4% in annual terms vs +4.0% in February), transport (+11.5% vs +1.9% in February), clothing (+1.4% vs +1.3% in February) and housing and utilities (-0.4% vs -1.2% in February). In contrast, price pressures reduced for recreation and entertainment in March (+1.8% vs +1.9% in February). Finally, consumer prices in Lima increased 2.38% in March in month-on-month terms, following a 0.69% rise in the prior month.

Panelist insight: Itaú Unibanco analysts commented on the outlook for price pressures and monetary policy: “The inflation backdrop has turned more challenging, largely reflecting renewed energy-price pressures. The BCRP has acknowledged that inflation is likely to remain near the upper end of the 2% ± 1% target range over the medium term. While the impact of the Coastal El Niño weather phenomenon on food prices should be contained, the overall risk balance has shifted upward. Against this backdrop, we expect the policy rate to be left unchanged at 4.25% at next week’s meeting, as the central bank maintains a cautious stance amid a closed output gap, elevated geopolitical risks, and deteriorating inflation momentum.”

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