Here is a comment that a Colour of Hope supporter made in reply to post, Falling exchange rates and rising prices cause alarm across Peru, from Wednesday, 10th October -
The dollar is indeed weak worldwide, and food price inflation is indeed a universal phenomenon (there have even been boycotts of pasta in Italy over its increased prices), but that doesn't of course make the situation any less devastating.
The good news is that with the orthodox macroeconomic policy pursued by Alan Garcia, Peru almost certainly won't see the hyperinflation it experienced when he attempted to spend more money than the government had in the 1980s. The bad news is that with stockpiles low worldwide food prices won't get any lower over the next year or two.
Expect the Peruvian government to come under increasing pressure to follow countries such as Argentina, and, most recently Russia, in imposing price caps on food. While this is superficially appealing, it has the perverse effect of increasing scarcity (because shops can't afford to stock goods that they have to sell at a loss) and forcing the government to spend vast amounts of money to keep prices low, which, in the long run, is what would make hyperinflation more likely again.
What is the situation at the moment? Have food prices dropped at all? Are price controls being discussed? Is the government getting the blame? Are Humala or any other populist figures capitalising on the issue?
The situation in Peru hasn't changed so far, unfortunately. Food prices haven't dropped and exchange rates haven't returned to what they were before 10th October. The good news though, is that rates haven't fallen any further. Although the dollar has remained at an all-time low, it seems to be stable for now.
I think there are mixed views about the government - Alan García has recently raised the minimum wage, which brought him some popularity amongst lower-middle classes. But after the 1980's fiasco, many people are extremely sceptical about the government's ability to control inflation. I haven't heard much about price controls so far, but there was talk of introducing a maximum price for milk.
The dollar is indeed weak worldwide, and food price inflation is indeed a universal phenomenon (there have even been boycotts of pasta in Italy over its increased prices), but that doesn't of course make the situation any less devastating.
The good news is that with the orthodox macroeconomic policy pursued by Alan Garcia, Peru almost certainly won't see the hyperinflation it experienced when he attempted to spend more money than the government had in the 1980s. The bad news is that with stockpiles low worldwide food prices won't get any lower over the next year or two.
Expect the Peruvian government to come under increasing pressure to follow countries such as Argentina, and, most recently Russia, in imposing price caps on food. While this is superficially appealing, it has the perverse effect of increasing scarcity (because shops can't afford to stock goods that they have to sell at a loss) and forcing the government to spend vast amounts of money to keep prices low, which, in the long run, is what would make hyperinflation more likely again.
What is the situation at the moment? Have food prices dropped at all? Are price controls being discussed? Is the government getting the blame? Are Humala or any other populist figures capitalising on the issue?
The situation in Peru hasn't changed so far, unfortunately. Food prices haven't dropped and exchange rates haven't returned to what they were before 10th October. The good news though, is that rates haven't fallen any further. Although the dollar has remained at an all-time low, it seems to be stable for now.
I think there are mixed views about the government - Alan García has recently raised the minimum wage, which brought him some popularity amongst lower-middle classes. But after the 1980's fiasco, many people are extremely sceptical about the government's ability to control inflation. I haven't heard much about price controls so far, but there was talk of introducing a maximum price for milk.
