Inflation poses severe challenges for emerging market economies. The latest example is in Peru, where social unrest spreads across the country, forcing the government to impose a curfew in the capital, Lima, on Tuesday, according to Reuters.
“The cabinet has agreed to declare a ban on the mobility of citizens from 2 a.m. through 11:59 p.m. of Tuesday, April 5, to protect the fundamental rights of all people,” Peruvian President Pedro Castillo said in a live broadcast last night.
The South American country was already struggling before commodity prices jumped to record highs because of the Ukraine invasion and virus pandemic supply chain disruptions. Social unrest began last month as demonstrations led by farmers and truckers have intensified over soaring food, fuel, and fertilizer prices.
Days ago, Peru Finance Minister Oscar Graham reduced the consumption tax for fuel and basic food items, hoping it would quell protests.
This all comes as Peru’s annual inflation hit 6.82% in March from a year earlier, the most since August 1998. April’s number is expected to top 7%.
Higher commodity prices, pushing up overall inflation, is metastasizing into a political crisis for Castillo, whose slumping popularity could fall even faster. Castillo has also called in the military to control violent protests.
“This strike isn’t happening just here, it’s all over Peru,” one unnamed protester told Reuters.
Besides tax cuts, the government has desperately raised the minimum wage by about 10% to about $322 per month.