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UPDATE 2-Peru's annual inflation hits 25-year high as food, fuel prices soar

(Recasts with details on annual inflation)

LIMA, July 1 (Reuters) - Peru’s annual inflation rate hit its highest level in a quarter of a century in June, driven by soaring food and fuel prices exacerbated by the global impact of the war in Ukraine, the Andean nation’s government said on Friday.

Consumer prices rose 1.19% last month in the Lima metropolitan region, seen as the national benchmark, ahead of the 0.52% increase in June of 2021 and also above the rates of the two previous months, according to statistics agency INEI.

On a year-over-year basis, inflation increased to 8.81%, the highest level since July 1997 when Peru was also grappling with soaring prices. Prices rose 4.44% in the first half of 2022.

INEI said food and beverage costs, which weigh the most on the inflation index, rose 1.88% in June, while transportation and communication prices increased by 3.24%.

High global fuel prices have triggered unrest in Peru, the world’s second-largest copper producer, while fertilizer shortages due to the Ukraine conflict have raised fears about food supplies as the government struggles to secure shipments.

In a bid to rein in high consumer prices, Peru’s central bank has been increasing interest rates. In June, it raised the benchmark rate by 50 basis points to 5.5%, the eleventh consecutive hike.

Inflation in Peru hit 6.43% in 2021, its highest rate in 13 years. (Reporting by Marco Aquino; Writing by Gabriel Araujo; Editing by Toby Chopra and Paul Simao)

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