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Peru’s Inflation Slowed in August on Cheaper Grain Imports

Peruvian monthly inflation slowed in August after increasing at the fastest pace in three years the previous month, as the lower cost of imported grains offset higher electricity prices.

Consumer prices rose 0.27 percent last month, down from 0.79 percent in July, the National Statistics Institute said in a statement published today in the official gazette. The median estimate of 10 economists surveyed by Bloomberg was for prices to rise 0.29 percent.

Inflation eased as companies passed on declines in international wheat and corn prices, which fell during June and July. Though international grain prices rose last month, slower global growth is likely to help contain imported inflation pressures, said Mario Guerrero, an economist at Scotiabank Peru.

“In the coming months, there’ll be less pressure from prices linked to imports and greater pressures from those linked to domestic demand, which have been on an upward path,” Guerrero said in a phone interview from Lima.

Monthly food inflation slowed to 0.35 percent in August from July’s three-year high of 1.64 percent, the agency said in an e-mailed report. Prices for chicken, which are fed on imported corn, rose 0.3 percent after surging 16 percent in July. Electricity rose 1.6 percent after a 0.9 percent increase the previous month.

Annual inflation held at a two-year high of 3.35 percent last month, the agency said.

Food, Oil

International food and crude oil prices have pushed the inflation rate “temporarily” outside policy makers’ 1 percent to 3 percent target range, central bank President Julio Velarde said in comments posted on the Finance Ministry’s website last week.

The central bank, which raised its benchmark lending rate to a two-year high in May, stands ready to adjust monetary policy if the global economy worsens, Velarde said.

The government said Aug. 25 an average 5 percent increase in fuel prices will be phased in over two months. Peru is a net importer of crude oil, soybeans, corn and wheat. Food and drink products constitute 38 percent of the consumer price index.

The country’s annual inflation rate will probably accelerate to 3.8 percent this year and slow to about 2.7 percent in 2012, Scotiabank’s Guerrero said.

The Peruvian sol was unchanged at 2.7265 per U.S. dollar at 11:37 a.m. New York time.

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