Peru’s annual inflation rate may remain above 3% through early 2024 due to an El Nino weather pattern that is already causing spiking food costs, central bank chief Julio Velarde said Thursday.
(Bloomberg) — Peru’s annual inflation rate may remain above 3% through early 2024 due to an El Nino weather pattern that is already causing spiking food costs, central bank chief Julio Velarde said Thursday.
“The inflation that includes food costs probably will only hit the inflation target in March or April, and that will depend on how strong the El Nino weather pattern is,” Velarde said during a presentation at the Perumin mining conference.
The central bank aims for an annual inflation target of between 1% and 3%. But a strong El Nino could delay it from reaching its goal by “a few months,” Velarde said.
The comments mark the first time Velarde has acknowledged that his latest inflation forecast may have been too optimistic. He initially said prices would hit the target band by the end of 2023 before revising his estimate to the first quarter of 2024, and now possibly later than that.
Annual inflation slowed less than expected to 5.58% in August. Velarde expects it to ease to 3.8% by the end of this year.
Read More: Peru’s Staple Ceviche Unaffordable as El Nino Devastates Farms
El Nino is expected to bring intense rains to Peru’s northern agricultural hub, which would lead to increased food costs. Peruvians are already feeling some effects, especially from a nearly 70% spike in the price of limes in August.
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