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12/1/08

Peru inflation update; Valdivieso already failing

The good news: At 0.31%, the November 2008 number is the lowest monthly increase in inflation since April.

The bad news: Peru's FinMin Valdivieso needs to see a virtual miracle negative 0.47% rate for December 2008, else see his own 5.8% inflation forecast made just three months ago get shot down in flames. A three month forecast from Peru's guiding light missing by a mile, and we're supposed to take these clowns seriously? What's more, remember that the 6.27% inflation figure for the first 11 months of 2008 is only for the Lima+Metro region, and that Lima+Metro has one of the lowest inflation rates in all of Peru. Check Jurgen Schuldt's blog for more details of the provincial breakdown and how inflation is nigh on double in some regions.

However, the PPI number is a little more optimistic, with a 0.13% drop being registered in November. The main beneficiaries of this have been miners and builders, with significant drops in fuels, steel and mining supplies registered (e.g. sulphuric acid has dropped from $480/MT to $150/MT and all of a sudden you don't have to pay double and still wait two month for a drilling crew). All these PPI savings are welcome for miners that have seen prices for their prodcue slashed and burned, of course, but aren't likely to make their way into the pockets of José Publico. He'll have to settle for a S/2 drop (U$0.67) for a month's worth of household gas supply. Like....errr....wow.