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How Inflation-Induced Unrest Will Impact Peru's Political and Business Climate

MIN READApr 5, 2022 | 20:09 GMT

Demonstrators block a section of the Pan-American highway during a partial strike of cargo and passenger carriers in Ica, southern Peru, on April 4, 2022.

Demonstrators block a section of the Pan-American highway during a partial strike of cargo and passenger carriers in Ica, southern Peru, on April 4, 2022.

(ERNESTO BENAVIDES/AFP via Getty Images)

In Peru, mounting protests and anger over rising fuel and food prices will push the government to introduce subsidies, which it will likely seek to pay for by raising taxes on copper and other extractive industries. On April 3, Peruvian Finance Minister Oscar Graham announced a 90% reduction in the tax rate on fuels, as well as tax exemptions for products including chicken, eggs, flour and noodles, in an effort to reduce prices following days of disruptive strikes by farmer and truckers unions. Peru is a net food importer and receives its staples such as wheat, soy and corn from other countries in South America. Peru is also a net importer of both refined and crude oil, making it particularly vulnerable to global energy market shocks like the current price surge created by the ongoing Russia-Ukraine war....

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