Representational image: Freepik
Many Peruvians can no longer afford to eat their own national dish, ceviche, as the El Nino weather pattern hits harvests and stokes food price inflation.
Heavy rains have devastated local lime crops, sending prices up by almost 70% just in August. Since lime juice is a key ingredient in Peruvian cuisine, that created a national furor and forced the finance minister to call for calm.
Rapid food price rises are preventing headline inflation from slowing to target as fast as policymakers would like, and creating hardship for poorer Peruvians. The damage done to the agricultural sector by El Nino tipped the economy into recession in the second quarter.
"It’s important that we use what is called consumer sovereignty,” Finance Minister Alex Contreras said in a TV interview on Sunday. "If this week I was planning to cook ceviche, I can switch it for a chicken stir fry.”
Memes on social media now show stacks of the citrus fruit as a sign of wealth. One portion of ceviche can require five or more limes to create the marinade used to cure raw fish.
The Lima inflation rate tracked by the central bank slowed to 5.6% last month, from 8.5% at the start of the year. But food and non-alcoholic beverage inflation was more than double that, at 11.5%. The bank targets annual consumer price rises of 2%.
Worse is expected next year, when El Nino is forecast to intensify, further disrupting agriculture. Peru is a major exporter of crops such as blueberries, asparagus and grapes.
Peru’s central bank is likely to cut interest rates at some time between September and December, according to a forecast by Felipe Hernández, who covers Latin America for Bloomberg Economics.
Chile and Brazil have already started cutting rates, and Colombia is forecast to follow suit next month.
