The conflict in Middle East caused a strong increase in the prices of oil, fertilizers and maritime freight, which drove an acceleration of inflation globally. However, after the announcement of the end of the war, these costs could stabilize in the coming months, although they would remain above pre-conflict levels, he noted. Julio Velardepresident of Central Reserve Bank (BCR).
“(Prices) are going to be affected in any way, but not how we project ourselves,” he said.
Velarde explained that the BCR will once again review its estimates on these three commodities, whose rising prices contributed to raising global inflation to 4.2%. However, the impact has been uneven between economies: in emerging countries inflation reached 5%, while in developed economies it stood at 3%.
“The concern that we central banks had is that even this increase in oil could be small if the inventories of developed countries continued (to be exhausted). These inventories had allowed them to use their oil so that the price did not rise so much, (but) they are being exhausted and the price would have risen sharply; it was even estimated that it could reach 200 dollars per barrel of oil,” he warned during the Loreto Economic Meeting organized by the BCR.
According to BCR data, Between May and February of this year, WTI rose 32.8% and Brent 28.6%. In the case of fertilizers, they ranged between 5% and 8% and freight rates increased by more than 50%.
Although the eventual stabilization of oil, fertilizer and freight prices would alleviate some of the external pressures on the peruvian economyconcern persists over the possible occurrence of a El Niño phenomenon of strong intensity, which could affect agricultural production and raise food prices.
“There were two factors that could affect the next government. One of them would have worsened if the war continued, but fortunately that risk is beginning to dissipate. However, the threat of El Niño remains,” he said.
Likewise, he pointed out that climatic events could generate problems at the end of the year and during the beginning of the next. “Everything will depend on the preventive measures taken by the new government,” he mentioned.
Even with this panorama, inflation in Peru continues to be the lowest in the region. The interannual indicator decreased to 3.9%; while the underlying remained at 4.4%; although, excluding the transportation item, said measure would have been 1.6%.
