(Adds economist comments)
By Gabriel Araujo
Feb 1 (Reuters) - Peru's consumer prices rose less than
expected in January despite the impact of growing political
tensions, but the 12-month rate ticked up as the Andean nation
battles the highest inflation in a quarter of a century, with
fresh rate hikes still on the table.
Government data showed on Wednesday that consumer prices in
the Lima metropolitan region, seen as the national benchmark,
were up 0.23% in the first month of the year, well below the
median forecast of 0.43% in a Reuters poll of economists.
It was the lowest monthly increase since January of last
year, slowing from the 0.79% rise seen in the previous month,
although not enough to prevent annual inflation from hitting its
highest since July.
Data from statistics agency INEI showed that consumer prices
rose 8.66% in the 12 months through January, remaining near a
quarter-century peak reached last year, though below a
projection made by Economy Minister Alex Contreras last month.
Contreras said annual inflation would likely soar over 8.8%
in January after protests and road blockades pushed up food
prices. He did note that the move would be temporary due to
stimulus measures the government was proposing for regions
roiled by protests.
Peru, the world's No. 2 copper producer, has been embroiled
in political turmoil since December, with anti-government
protests blocking roads and clashes with security forces leading
to the deaths of dozens of people.
Economists at BBVA Research said they expect year-on-year
inflation to continue at high levels in the short term, even
above 8%, as the persistent unrest affecting food supply,
alongside lack of rains and high fertilizer costs, takes its
toll on local prices.
The latest monthly inflation increase was mainly due to
higher food and non-alcoholic beverage costs, as well as rising
hotel and restaurant prices, INEI said in a report. Decreasing
transportation costs partially offset those rises.
The fresh data also follows aggressive monetary tightening,
as Peru's central bank has raised its benchmark interest rate
periodically since the second half of 2021 to combat inflation
that surged well ahead of its 1%-to-3% target range.
The latest 25 basis-point hike to 7.75% happened in January,
when the central bank said a downward trend in inflation was
projected from March, and a return to the range in the fourth
quarter.
BBVA economists, however, noted that inflation expectations
for 2023 remain above 4%, saying in a report that "despite the
weakness of economic activity, we do not rule out that the
central bank finds it prudent to raise its interest rate a
little more, to 8.0% in February".
(Reporting by Gabriel Araujo in Sao Paulo; Editing by Steven
Grattan and Bill Berkrot)
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