Peru: Consumer confidence drops in May on the new government’s tax hikes
The consumer confidence indicator published by GfK dropped to 90 in May, down from 98 in the prior month. April’s print had marked the first move closer to optimistic territory after five consecutive months of declines. The deterioration reflected consumers’ disappointment with the new government’s tax hikes, especially on fuels. The indicator thus moved farther away from the crucial 100-point threshold that separates optimism from pessimism among Peruvian consumers; it has been below the threshold since November 2017.
Consumers grew more pessimistic as the number of consumers who believed that the new government is taking measures to reactivate the economy declined. Moreover, consumers’ confidence in short-term economic improvement decreased. Respondents largely perceived the economy to be growing, but at a softer pace than before. Nevertheless, the number of respondents who believed growth has stalled continued to decrease. Also, the number of households who expected that their personal economic situations would improve in the next 12 months fell. Furthermore, there was a decline in the number of respondents who believed that with Vizcarra as president it would be possible to return to economic growth.