Peru’s Inflation Accelerates to Fastest Pace in Three Years

Inflation in Peru’s capital accelerated to the fastest pace in three years in September, remaining stubbornly outside the target range and boosting pressure on the central bank.

Consumer prices in Lima rose 4.55% last month from a year earlier, up from August’s 4.44% reading, according to data released Thursday by the national statistics agency INEI. Mainly driven by higher fuel prices, the result was marginally below the 4.58% median estimate of economists surveyed by Bloomberg.

On the month, consumer prices in the capital, which has long been used as a proxy for Peru’s inflation rate, accelerated 0.12%. That also came just below the 0.14% median estimate.

The September reading marks the seventh straight month that annual inflation has exceeded the central bank’s 1%-3% target range, as higher global fuel prices and weather anomalies have been weighing on transport, crop yields and fishing.

Ahead of the report, veteran central bank Governor Julio Velarde said policymakers couldn’t rule out raising the benchmark interest rate in coming months, with any move largely depending on how El Niño develops. The weather phenomenon is expected to reach extraordinary magnitude, bringing unusually high temperatures and heavy rains that could disrupt key industries.

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Peru is a top exporter of metals like copper and gold, as well as fruits such as blueberries and grapes. It is also one of the world’s top producers of fishmeal used in animal feed.

Velarde, who has just been reappointed for another five-year term at the helm of the central bank, expects inflation to end the year at 4.2% and return to the target range in 2027. The central bank also recently cut its 2026 growth forecast to 3.2% from 3.4%, citing disruptions linked to El Niño.

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The policy rate has been left unchanged at 4.25% for 12 straight months. The bank’s policy committee next meets Oct. 7.