Peru’s Inflation Cools in May but Stays Above Target

PERU · ECONOMY

Peru’s consumer prices fell in May for the first time this year, pulling annual inflation down to 3.91%, below analysts’ expectations but still above the central bank’s target range. Cheaper food and transport drove the monthly decline, easing some of the pressure that built up earlier in the year.

What the data show

The National Institute of Statistics and Informatics (INEI) reported that the consumer price index for Metropolitan Lima, Peru’s inflation benchmark, fell 0.16% in May compared with the previous month. It was the first negative monthly reading of the year, against a 0.52% rise in April.

Over the twelve months to May, inflation eased to 3.91%, down from 4.01% in April. The accumulated rate for the first five months of the year was 3.56%. The outcome came in below analysts’ expectations, though it left annual inflation still above the central bank’s target band of 1% to 3%.

What pulled prices lower

The monthly decline was driven mainly by lower prices in food and non-alcoholic beverages, the heaviest-weighted category in the index, which fell 1.69%, along with a drop in transport costs. Of the 586 products in the basket, 318 rose in price, 134 fell and 134 were unchanged.

Among the steepest falls were green peas, mussels, strawberries, eviscerated chicken and liquefied petroleum gas. Core inflation, which strips out food and energy, rose a modest 0.09% on the month, suggesting underlying price pressures remained contained.

The earlier oil-price shock

The May reading marks a cooling after a spike earlier in the year. In April, inflation had been lifted by the effects of higher international oil prices linked to the conflict in the Middle East, which fed through to transport and food costs.

Peru recorded inflation of 1.5% last year, one of the lowest rates in the region, and the central bank expects the rate to close 2026 at around 2.4%, bringing it back within target as the earlier shocks fade.

What it means

For the central bank, which has held its benchmark interest rate at 4.25%, the softer reading is a welcome sign that the earlier price pressures may be easing, though the rate remains above the target ceiling. Policymakers have signalled they want clearer evidence on the path of inflation before adjusting policy.

The data arrive against a backdrop of political transition, with the country in the middle of a presidential election process. This article reports official data and is general information, not investment advice.