(Bloomberg) -- Peru’s annual inflation accelerated moderately in June in line with economists’ expectations while remaining within the central bank’s target range. 

Annual inflation in the nation’s capital, Lima, rose 2.29%, compared with the 2.30% median estimate of economists surveyed by Bloomberg, the national statistics institute reported Monday. On the month, prices rose 0.12%, just above the median estimate for a 0.10% rise. 

Inflation in Peru remains the lowest among Latin America’s major economies and central bank President Julio Velarde has said he expects price increases to close 2024 at 2.2%. The central bank maintains a target band for inflation of 1% to 3% and consumer price increases have now stayed within the band for three straight months.

But Velarde has signaled that he is more closely monitoring inflation excluding energy and food costs, sometimes known as core inflation, which has remained above 3%, limiting the pace of interest rate cuts. The year-on-year core print for June was unchanged at 3.1%.

What Bloomberg Economics Says

“Peruvian inflation data for June added evidence that upward pressure on core prices is persisting amid accumulated exchange rate depreciation since May and recovering activity and domestic demand. That limits room for policymakers to continue cutting interest rates. The rise in the annual headline inflation rate isn’t a significant concern, in our view, as it was mainly driven by base effects on non-core food and matched analysts’ expectations.”

— Felipe Hernandez, Latin America economist

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The central bank is scheduled to announce its next interest rate decision next week after unexpectedly holding borrowing costs unchanged at 5.75% at its last meeting on June 13. Peruvian Finance Minister Jose Arista has asked Velarde to speed up interest rate cuts in a bid to boost the economy, which most recently grew significantly above expectations. 

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