Peru’s inflation rate YoY for December 2025, as reported by the Sigmanomics database, registered at 1.37%, a slight increase from November’s 1.35%. This figure remains well below the 12-month average of approximately 1.49% recorded since March 2025, when inflation peaked at 1.69%. The current inflation environment reflects a stable but cautious macroeconomic backdrop amid ongoing global uncertainties.

Drivers this month

• Food prices contributed 0.22 percentage points, driven by seasonal supply constraints.
• Energy costs added 0.15 percentage points, reflecting moderate oil price volatility.
• Core services inflation remained subdued, contributing 0.05 percentage points.
• Used vehicle prices slightly eased, subtracting -0.05 percentage points.

Policy pulse

The inflation rate remains below the Central Reserve Bank of Peru’s (BCRP) target midpoint of 2%, signaling room for a cautious monetary stance. The BCRP has maintained its policy rate at 4.25%, balancing inflation containment with growth support. The current inflation reading supports this steady approach, though vigilance is warranted given external risks.

Market lens

Immediate reaction: The Peruvian sol (PEN) depreciated marginally by 0.10% against the USD in the first hour post-release. Short-term government bond yields edged up by 3 basis points, reflecting mild inflation risk repricing. Inflation breakeven rates for 2-year horizons held steady near 1.50%, indicating stable medium-term inflation expectations.

Examining core macroeconomic indicators alongside inflation provides a fuller picture of Peru’s economic health. GDP growth for Q3 2025 was reported at 2.80% YoY, slightly below the 3.00% average of the past year but consistent with moderate expansion. Unemployment remains low at 5.10%, supporting consumer demand. Wage growth has moderated to 3.20% YoY, aligning with subdued inflation pressures.

Monetary policy & financial conditions

The BCRP’s neutral stance is supported by stable credit growth of 5.50% YoY and contained inflation expectations. Real interest rates remain mildly positive, fostering balanced financial conditions. The central bank’s forward guidance emphasizes data dependency, with inflation readings like December’s reinforcing a wait-and-see approach.

Fiscal policy & government budget

Fiscal policy remains expansionary but prudent. The government’s budget deficit narrowed to 2.30% of GDP in Q3 2025, down from 3.10% a year earlier. Public investment in infrastructure and social programs continues, supporting growth without overheating the economy. This fiscal discipline helps anchor inflation expectations.

External shocks & geopolitical risks

Global commodity price fluctuations, especially in metals and oil, pose upside inflation risks for Peru. Geopolitical tensions in Latin America and supply chain disruptions could also pressure prices. However, a resilient export sector and diversified trade partners mitigate some vulnerabilities.

Market lens

Immediate reaction: The PEN/USD exchange rate showed a slight depreciation of 0.10%, while 2-year government bond yields increased by 3 basis points. Inflation-linked bond spreads remained stable, reflecting steady medium-term inflation expectations.

Looking ahead, Peru’s inflation trajectory will depend on several factors including commodity prices, domestic demand, and monetary policy responses. The baseline scenario projects inflation stabilizing around 1.40%–1.60% over the next six months, supported by moderate growth and stable wage dynamics.

Bullish scenario (20% probability)

• Global commodity prices ease, reducing input costs.
• Monetary policy remains accommodative, supporting growth without inflation spikes.
• Fiscal discipline continues, anchoring inflation expectations.
• Inflation falls below 1.20% YoY by mid-2026.

Base scenario (60% probability)

• Inflation hovers between 1.40% and 1.60% YoY.
• Monetary policy remains steady, with gradual adjustments if needed.
• External shocks cause mild volatility but no sustained inflation surge.

Bearish scenario (20% probability)

• Commodity price spikes and supply chain disruptions push inflation above 2%.
• Monetary tightening accelerates, risking growth slowdown.
• Fiscal expansion pressures prices further.

Policy pulse

The BCRP is likely to maintain its cautious stance, monitoring inflation closely. Any sustained rise above 2% could prompt rate hikes, while persistent low inflation may encourage easing or rate cuts.

Peru’s inflation rate YoY of 1.37% in December 2025 reflects a stable macroeconomic environment with moderate price pressures. The interplay of monetary prudence, fiscal discipline, and external factors will shape the inflation path in 2026. While risks remain, the current data supports a balanced outlook with manageable inflation and steady growth.

Financial markets & sentiment

Market sentiment remains cautiously optimistic. Inflation-linked securities and the Peruvian sol have shown resilience, while bond yields reflect measured inflation risk. Investors are closely watching global commodity trends and geopolitical developments for clues on inflation direction.

Structural & long-run trends

Long-term inflation in Peru has trended downward over the past decade, aided by improved monetary frameworks and fiscal management. Structural reforms and diversification of the economy further support low and stable inflation, though vigilance against external shocks is essential.

Key Markets Likely to React to Inflation Rate YoY

Peru’s inflation data influences a range of markets, from local currency to equities and commodities. Traders and investors monitor these indicators to adjust positions and hedge risks. Below are key symbols historically sensitive to Peru’s inflation trends.

• BBVA.PE – Major Peruvian bank, sensitive to inflation-driven interest rate changes.
• USDPEN – USD to Peruvian sol exchange rate, directly impacted by inflation and monetary policy.
• BTCUSD – Bitcoin as an inflation hedge, often reacts to inflation surprises globally.
• SBSV – Mining sector stock, linked to commodity price-driven inflation pressures.
• EURPEN – Euro to Peruvian sol, reflecting broader currency sentiment and inflation outlook.

Inflation Rate YoY vs. USDPEN Exchange Rate Since 2020

Since 2020, Peru’s inflation rate and the USDPEN exchange rate have shown a moderate inverse correlation. Periods of rising inflation often coincide with PEN depreciation against the USD, as inflation pressures prompt expectations of monetary tightening or currency weakness. The chart below illustrates this relationship, highlighting key inflection points during commodity price shocks and policy shifts.

FAQs

What is the current Inflation Rate YoY for Peru?

The latest inflation rate YoY for Peru is 1.37% as of December 2025, slightly above the previous month’s 1.35%.

How does Peru’s inflation compare historically?

Inflation has fluctuated between 1.11% and 1.69% over the past year, remaining below the central bank’s 2% target.

What are the main risks to Peru’s inflation outlook?

Key risks include commodity price volatility, geopolitical tensions, and potential fiscal expansion that could push inflation above target.

Takeaway: Peru’s inflation remains contained but closely tied to external commodity trends and domestic policy. Vigilant monitoring and balanced policy will be key to sustaining price stability in 2026.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.