Inflation Report June 2026: Current Outlook and Macroeconomic Projections 2026 - 2027

INFLATION REPORT June 2026 Current Outlook and Macroeconomic Projections 2026-2027

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Inflation Report:
June 2026
Inflation
Inflation Expectations
Economic Activity
(GDP gap with potential output)
Public Finances
External Sector
Exchange Rate
Interest Rates
Liquidity and Credit
Monetary Policy:
Reference interest rate and liquidity management instruments Financial Shocks Demand Shocks Supply Shocks

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CENTRAL RESERVE BANK OF PERU
Contents
.................................................................................................................Page
Prologue ...................................................................................................................... 5
Summary ...................................................................................................................... 6
I. External Sector ........................................................................................... 10
− Recent evolution of global economic activity .................................. 12
− Recent evolution of inflation ................................................................ 19
− Monetary and fiscal policy responses ................................................... 26
− Global economic outlook............................................................ 30
− International financial markets ......................................................... 32
− Commodity prices......................................................................... 42
II. Balance of Payments ...................................................................... 57
− Terms of trade and merchandise trade balance ........................... 57
− External accounts results ........................................................... 61
− Net International Reserves ................................................................. 68
III. Economic Activity ................................................................ 70
− Sectoral GDP ................................................................................ 70
− Expenditure GDP..................................................................................... 78
IV. Public Finances ..................................................................... 97
− Current revenues...................................................................... 99
− Non-financial expenditures................................................................ 101
− Fiscal stance............................................................................. 102
− Financing and debt ............................................................................ 103
V. Monetary Policy and Financial Conditions ...................................... 122
− Monetary policy actions ................................................................. 122
− Foreign exchange market.................................................................... 138
− Liquidity ..................................................................................... 144
− Credit to the private sector ........................................................... 147
VI. Inflation and inflation risk balance .......................................... 160
− Recent evolution ..................................................................... 160
− Projections............................................................................. 169
− Balance of risks for the inflation projection ..................................... 174

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Boxes

1. Identification of economic boom periods..................................................... 89
2. Economic policy measures in response to significant increases in fuel prices: International experience this decade .................................... 106
3. The importance of fiscal space: Fiscal position and net debt dynamics this century.............................................................................................................. 114
4. Recent estimates of the natural interest rate for Peru...................... 151
5. Monetary policy response to supply shocks: evidence for Peru . 155
6. Macroeconomic effects in Peru of increases in international oil prices.......................................................................................................... 176
   This Inflation Report has been prepared with information up to the first quarter of 2026 for the Balance of Payments and Gross Domestic Product; up to April 2026 for monthly GDP; up to April for monetary accounts and Non-Financial Public Sector operations; and up to May for inflation, financial markets, and the exchange rate.

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Prologue

• In accordance with the Political Constitution, the Central Reserve Bank of Peru (BCRP) is an autonomous public entity, whose purpose is to preserve monetary stability. Its main functions are to regulate currency and credit, administer international reserves, issue banknotes and coins, and report on the state of national finances.
• To achieve this purpose, the BCRP follows an Explicit Inflation Targeting policy. The inflation target (a range between 1 and 3 percent) seeks to anchor inflation expectations at a level similar to that of developed economies and establish a permanent commitment to currency stability.
• According to an announced schedule, the BCRP Board of Directors decides monthly since 2003 the level of the reference interest rate for the interbank lending market. This interest rate is the operational target of monetary policy, which affects the inflation rate with lags and through different channels. Therefore, this interest rate is determined based on inflation projections and their determinants.
• Inflation may temporarily deviate outside the target range due to the presence of shocks that can temporarily affect the supply of goods and services. It should also be noted that the effectiveness of monetary policy is evaluated in terms of its success in keeping inflation expectations within the target range, and returning to that range within a reasonable time horizon if deviations have occurred due to some shock to the economy.
• Additionally, the BCRP implements preventive measures to safeguard macrofinancial stability and thus preserve the transmission mechanisms of monetary policy. In this way, the reference interest rate is complemented by the use of other monetary policy instruments, such as injection and sterilization operations, reserve requirements, and foreign exchange intervention, to ensure the proper functioning of markets, reduce excessive exchange rate volatility, and avoid significant variations in the volume and composition, by currencies and maturities, of credit in the financial system.
• The Inflation Report was approved at a Board meeting on June 11, 2026, and includes macroeconomic projections for the 2026-2027 period, which support the BCRP's monetary policy decisions, as well as risk factors that may deviate these projections.
• The next Inflation Report will be released on Friday, September 18, 2026.

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Summary
i. Since the last Report, global economic activity and its outlook have been affected by the conflict in the Middle East, due to its effects on input supply and energy costs. This shock has translated into inflationary pressures in several countries, leading to a more restrictive monetary policy stance. However, these effects would be offset by the dynamism of industries linked to artificial intelligence, an expansive fiscal policy in developed economies, and for the second half of the year by the recent agreement between the United States and Iran. In this context, the global growth projection remains at 3.1 percent for 2026. For 2027, a similar rate would be registered, representing a slight revision to what was projected in the March Report (3.0 percent). This current projection scenario considers a normalization of trade and supply chains affected during the war in the Middle East. Nevertheless, there is a risk that the conflict could restart, which, coupled with the occurrence of a severe global El Niño phenomenon, imposes downward biases on the projection.
ii. Terms of trade rose 35.9 percent in the first quarter of 2026, supported by the continuous increase in mining export prices. International prices for these products rose due to demand linked to energy infrastructure and data centers, persistent supply restrictions, the recent increase in geopolitical tensions, and ongoing trade uncertainty, which favored demand for safe-haven assets. The terms of trade for 2026 are revised upwards, from a growth of 11.5 to 18.3 percent, due to the forecast of higher prices for the main exported metals, fundamentally copper and zinc. The terms of trade index would slightly decrease in 2027 compared to the previous year, remaining among the highest levels on record.
iii. The balance of payments continued to strengthen its position. The current account surplus increased from 3.5 percent of GDP in 2025 to 4.3 percent annualized in the first quarter of 2026, explained mainly by the rise in terms of trade. The current account surplus is projected to reach 3.9 and 3.1 percent of GDP in 2026 and 2027, respectively. The increase in the trade surplus in 2026, mainly supported by the strong increase in terms of trade, would outweigh the deficit pressures derived from the dynamism of domestic demand on imports and higher profits of foreign-owned companies. In 2027, although the surplus would remain at high levels, its reduction as a percentage of GDP would respond to a lower level of terms of trade and higher growth in domestic demand relative to output, partially offset by lower freight outflows.
iv. National economic activity grew 3.5 percent year-on-year in the first quarter of 2026, supported by the continuous advance of private spending, which was reflected, on the supply side, in the greater dynamism of non-primary activities, fundamentally construction, trade, and services. In contrast, primary activities moderated their growth, affected by the contraction of hydrocarbons and fishing, which in turn led to lower exported volumes of natural gas and fishmeal. For 2026, the GDP growth projection is revised upwards from 3.2 to 3.4 percent, mainly due to the anticipated greater dynamism of non-primary sectors, associated with the upward revision of private spending. The dynamism of private investment would be consistent with the evolution observed in the first quarter of the non-residential component, the progress of leading indicators, and a higher terms of trade projection, while private consumption would benefit from the advancement of the labor market. However, this upward revision would be partially offset by a lower contribution from primary activities, for which a contraction is foreseen associated with a new forecast of greater intensity and duration of the El Niño phenomenon, as well as maintenance work at a natural gas liquefaction plant. For 2027, the economy is expected to register an expansion of 3.2 percent, supported by the dynamism of non-primary sectors. Meanwhile, primary sectors would continue to be affected by El Niño climatic anomalies, which would extend until the summer of that year. The current projection assumes an environment of macroeconomic and financial stability, which would contribute to sustaining the confidence of economic agents and the continued progress of private spending.

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v. The accumulated fiscal deficit over the last twelve months decreased from 2.2 to 1.6 percent of GDP between December 2025 and May 2026. The fiscal deficit is projected to decrease from 2.2 to 1.8 percent of GDP between 2025 and 2026, and to 1.5 percent of GDP in 2027. The projection for 2026 considers a moderation in the real growth of non-financial expenditures (2.9 percent), in line with fiscal consolidation, and a growth in real current revenues (6.8 percent) due to higher commodity prices, the effect of terms of trade on nominal GDP, and a lower primary result from companies. It is estimated that the net debt of deposits of the Non-Financial Public Sector will decrease from 22.7 to 22.3 percent of GDP between 2025 and 2027. Public assets would decrease from 7.4 to 6.2 percent of GDP between 2025 and 2027, therefore, it is necessary to continue on a path of decreasing fiscal deficit to stabilize debt in the coming years, without depleting public financial assets.
vi. The BCRP Board decided to maintain the reference interest rate at 4.25 percent since September 2025. Interest rates in national currency continued to evolve in line with the reference rate, particularly in segments with lower credit risk and shorter maturities. As expected, the year-on-year expansion rate of liquidity in national currency (currency in circulation plus deposits) accelerated from 11.4 percent in December 2025 to 17.8 percent in April 2026. Meanwhile, in the same period and also in line with projections, the year-on-year growth rate of credit to the private sector increased from 6.6 percent in December 2025 to 8.7 percent in April 2026, supported mainly by the MSME segments; and, to a lesser extent, by medium-sized and corporate and large companies, and by consumption, in line with the recovery of economic activity. Moving forward, credit to the private sector is expected to grow at rates between 9 and 7 percent in 2026 and 2027, in line with the projected economic activity growth and the reduction in delinquency.

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vii. Year-on-year inflation increased from 2.21 percent in February 2026 to 3.91 percent in May, mainly due to the increase in fuel and transport prices. Trend indicators suggest that these pressures are contained. In the same period, inflation excluding food and energy (EFE) rose from 2.20 to 4.44 percent, mainly reflecting the increase in local transport prices; excluding this component, EFE inflation stood at 1.56 percent. In May, 36 percent of CPI items registered rates above 3 percent, a level close to that observed in periods when inflation is around the center of the target range. Inflation is projected to be above the upper limit of the target range in the coming months, due to the price increase recorded in March and April, in a context of higher international oil prices. Subsequently, inflation would converge towards the center of the target range. Thus, an inflation rate of 3.8 percent is estimated for 2026 and 2.0 percent for 2027. This projection considers economic activity around its potential level and inflation expectations that would decrease towards the central value of the target range.
viii. The balance of risks for the inflation projection is revised upwards compared to the March Report, mainly due to the increased risk of internal supply shocks. The base scenario assumes a strong, but not extraordinary, Coastal El Niño phenomenon, while the relative contribution of risks from financial shocks and external demand is moderated. Among the main risks are: (i) greater supply shocks, both internal and external, associated with the possible intensification and persistence of the Coastal El Niño phenomenon and disruptions in international input markets; (ii) episodes of financial volatility and capital outflows; (iii) weakening of domestic demand if population income decreases due to a potential extraordinary El Niño phenomenon; and (iv) lower external demand due to a slowdown in global growth and a reduction in terms of trade.

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SUMMARY OF PROJECTIONS
IR Mar.26 IR Jun.26 IR Mar.26 IR Jun.26
Real % Var.

1. Gross Domestic Product 3.4 3.2 3.4 3.2 3.2
2. Domestic Demand 5.6 4.9 5.9 3.3 3.5
   a. Private Consumption 3.6 3.4 3.6 3.0 3.0 b. Public Consumption 3.3 2.7 3.2 2.3 2.3
   c. Private Fixed Investment 10.0 9.5 12.5 5.0 6.0
   d. Public Investment 5.7 1.0 2.5
3. Exports of Goods and Services 4.7 1.6 0.6 4.0 2.9
4. Imports of Goods and Services 12.6 7.7 9.6 4.2 4.2
5. World GDP Growth 3.4 3.1 3.1 3.0 3.1
   Note:
   Output Gap 1/ (%) 0.0 ; 0.5 -0.5 ; 0.5 0.0 ; 0.5 -0.5 ; 0.5 0.0 ; 0.5 % Var.
6. Inflation (end of period) 1.5 2.4 3.8 2.0 2.0
7. Expected Inflation 2/ 2.1 2.1 3.2 2.2 2.4
8. Expected Depreciation 2/ -9.9 0.3 3.2 0.6 0.0
9. Terms of Trade 19.9 11.5 18.3 -0.6 -1.3
   a. Export Prices 17.5 19.4 25.6 -0.6 -0.6 b. Import Prices -2.0 7.1 6.2 0.0 0.7 Nominal % Var.
10. Currency in Circulation 14.5 10.0 12.0 6.0 6.0
11. Credit to the Private Sector 6.6 8.0 9.0 7.0 7.0
    % GDP
12. Gross Fixed Investment 21.6 21.8 22.0
13. Current Account Balance of Payments 3.5 3.2 3.9 3.1 3.1
14. Trade Balance 10.4 11.4 12.3 11.0 11.2
15. Private Medium and Long-Term External Debt 3/ 10.0 7.9 7.6 6.9 6.4
16. General Government Current Revenues 19.0 19.0 18.9 19.1 19.1
17. General Government Non-Financial Expenditures 19.9 19.2 19.0 19.0 19.2
18. Economic Result of the Non-Financial Public Sector -2.2 -1.8 -1.8 -1.4 -1.5
19. Total Public Debt Balance 30.1 29.3 28.2 29.5 28.5
20. Net Public Debt Balance 22.7 22.8 21.6 23.2 22.3
    IR: Inflation Report
    Projection.
    1/ Difference between GDP and potential GDP (as a percentage of potential GDP).
    3/ Includes national currency obligations with non-residents.
    2026
    2025
    2027*
    2/ Survey of expectations of analysts and financial entities conducted at the time of publication of the respective Inflation Report. For 2025, observed information has been considered for depreciation and the average of expectations throughout the year for inflation.

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I. External Sector

1. The conflict in the Middle East affected the world economy between March and June, with its impact on energy prices and the supply chain intensifying after the closure of the Strait of Hormuz. Oil prices, which were around USD/br 70 in February, fluctuated in a range of USD/br 90-110. The spot price, effectively paid, even reached higher levels in European and Asian markets. However, at the close of this Report, the signing of a memorandum of understanding between the United States and Iran has partially reversed these upward pressures. Since the last Report, restrictions on gas and energy trade in the Strait of Hormuz, which accounts for 20 percent of global traffic of these products, generated an increase in international fuel and transport service prices. The measures applied —mainly linked to energy saving and a reduction in the cost paid by the consumer— only marginally mitigated the initial impact of this shock.
   Graph 1
2. Likewise, restrictions were registered in the supply of a series of inputs such as fertilizers, aluminum, sulfur, and helium. This scarcity has affected activity in agriculture, metal refining, the automotive, electrical appliance, and semiconductor industries, among others. This increases the probabilities of an inflationary process extending to several sectors and an increase in inflation expectations.

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Table 1
EVOLUTION OF INDICATORS ASSOCIATED WITH THE MIDDLE EAST CONFLICT Source: Bloomberg, EIA.
3. In general, these shocks have increased inflationary pressures in the vast majority of countries: from a sample of 100 countries, 77 percent registered an increase in the annual inflation rate during April, compared to 44 percent in February. In the particular case of the US, this shock also implies a slower convergence of inflation towards the target. In the cases of Asian and European countries, heavily dependent on Middle Eastern gas and oil, a similar upward trend is observed.
4. At the same time, these supply shocks have had an effect on global activity which, in line with recent developments, would gradually reverse over the projection horizon. However, the dynamism of industries linked to artificial intelligence and expansive fiscal policies in most developed economies would partially offset this impact. Additionally, a favorable performance in international trade is observed, suggesting a moderate impact of tariff measures applied since 2025. In this sense, global growth of 3.1 percent is projected for 2026 and 2027.
5. Under this scenario of increased inflationary pressures and resilient growth, monetary policy prospects have shifted towards a more restrictive stance. In the case of the Federal Reserve (Fed), futures markets, which months ago discounted a 50 basis point reduction in the policy rate over the 2026-2027 projection horizon, now estimate a 25 basis point increase by the end of this year.
Feb-26 Mar-26 May-26
(a) (b) (c)
WTI (Cushing) USD/Barrel 67.0 102.9 91.2 53.6 36.1 Brent (first position) USD/Barrel 72.5 118.4 92.1 63.3 27.0 Brent (Spot) USD/Barrel 71.3 126.7 92.9 77.6 30.2