Peruvian consumer prices rose in May at the slowest pace in four months after food and fuel costs fell, the government said.
Inflation eased to 0.04 percent from 0.53 percent in April while the annual rate was 4.14 percent, the national statistics agency said. The median estimate of analysts in a Bloomberg survey was for increases of 0.13 percent and 4.23 percent respectively.
The nation’s central bank increased reserve requirements from May 1 to prevent bank lending from fueling demand pressures as growth rose. Policy makers are ready to tighten monetary policy further if they see demand stoking inflation that’s been above target since July, central bank President Julio Velarde said May 22.
“So far inflation pressures have been coming from supply shocks and not from the demand side,” Mario Guerrero, an economist at Scotiabank Peru, said by phone from Lima. “The outlook is for inflation to return to the target range next year. The bank can keep rates on hold.”
Scotiabank projects 3.3 percent inflation this year. The finance ministry said in a report yesterday inflation will slow to 2.8 percent while gross domestic product will rise 6 percent, up from a March 9 forecast of 5.7 percent.
The government’s consumer-price index is based on a survey by the statistics agency of establishments in the Lima Metropolitan area. Food and drink products constitute 38 percent of the index.
Food and drink prices declined 0.04 percent last month, electricity prices fell 0.2 percent and gasoline retreated 0.7 percent, the agency said.
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