Peru's consumer price index rose the most in more than three years in July, government data showed on Monday, but the central bank is still seen as unlikely to raise its benchmark interest rate on August 11. Inflation was 0.79 percent in July, well above the 0.5 percent forecast in a Reuters poll due to a rebound in food prices, especially poultry products. Fuel costs associated with independence day also contributed to higher prices.
The result brought accumulated inflation so far this year to 3.06 percent, above the ceiling of the central bank's annual target range of 1 to 3 percent. The inflation rate in June was a moderate 0.1 percent. July's result was the highest since March 2008, when consumer prices rose 1.08 percent, according to Peru's central bank. The bank has raised interest rates five times so far this year in a bid to curb inflationary expectations, but has held its benchmark rate steady for the past two months at 4.25 percent after international food prices showed more stability and the pace of economic growth slowed.
Analysts said the largely unexpected rebound in inflation in July did not mean the central bank would decide to resume its tightening cycle when it meets on August 11. Peru's economy grew 8.8 percent last year, one of the region's fastest paces. It is expected to grow 6.5 percent this year, partly as investors grew cautious ahead of leftist's Ollanta Humala's victory in a June 5 presidential election.