PERU 1988–1990

Peru’s Hyperinflation and the Fujishock: The Least-Charted Major Episode in the Record

Alberto Fujimori was inaugurated president of Peru on 28 July 1990. Eleven days later, on 8 August, his government acted. It let fuel, food and other government-controlled prices float to their real level overnight, ending years of price controls in a single announcement. Peruvians still call it the Fujishock. The controlled price of gasoline rose roughly thirtyfold overnight — an outside figure from contemporaneous accounts of the announcement, not one of ours. We hold Peru’s money supply, not its price list.

Peru’s money supply grew 6,384.9% in 1990, its actual hyperinflation year, by our own calculation from the raw IMF series. It then decelerated to 230.6% (1991), 88.2% (1992), 71.8% (1993) and 37.2% (1994) — the same shape as Brazil’s recovery, just steeper at the start. Peru’s own series runs from 1960 through June 2023, covering the run-up, the shock and the stabilisation end to end.

Every other episode in this series carries a 2026 observation. Peru’s stops in June 2023, nearly three years earlier. We don’t have a newer official figure to close that gap, so the growth and CAGR figures above are three years old rather than current — we say so rather than implying a recency we don’t have.

Peru’s series also changes source at January 2006: World Bank annual data through 2004, IMF monthly from 2006-01, with no 2005 observation at all. Every growth figure quoted on this page comes from 1985-2000, well clear of that seam. A rate computed across a source change measures two definitions as much as the economy. We keep the whole episode on one side of it.

Sol, inti, nuevo sol: the redenomination arithmetic

Peru burned through two currencies to get to the one it uses today. President Alan García’s government replaced the sol de oro with the inti in February 1985, at a rate of 1 inti to 1,000 soles — three zeros gone, meant to fix an inflation problem that was already running hot. By our own calculation, money supply had grown 156.5% in 1985 itself, and it didn’t stop: 54.0% in 1986, 106.5% in 1987, 621.0% in 1988, 1,917.3% in 1989. The inti didn’t fix anything. It just renamed the problem for five years before 1990’s 6,384.9% blew through it entirely.

President Fujimori’s government retired the inti on 1 July 1991, replacing it with the nuevo sol at a rate of 1 nuevo sol to 1,000,000 intis — six more zeros gone. Stack both redenominations together and Peru cut nine zeros off its currency between 1985 and 1991. The 1991 change took six of them in one step. That is a bigger single cut than Argentina’s largest (four zeros, 1992) or Brazil’s (three zeros, made three separate times). Zimbabwe beat all three, with twelve zeros in one go in 2009. The nuevo sol is still Peru’s currency today, and it’s the one that actually held.

Neither Peruvian cut shows up in our series as a step down. The World Bank backfill is stated in constant nuevos soles across the whole 1960-2004 stretch, so 6,384.9% and 230.6% are growth rates, not the redenomination arithmetic wearing a percentage sign.

The Fujishock: fiscal reform without dollarization or a peg

Every Peru hyperinflation figure we compute is money supply, not prices, and the two are not interchangeable. Our 6,384.9% is a money number. We don’t hold Peru’s CPI. For the price side we use somebody else’s figures and name them. Hanke and Krus, in World Hyperinflations (Cato Institute working paper, 2012; reprinted in the Routledge Handbook of Major Events in Economic History, 2013), date Peru’s hyperinflation to July and August 1990. They put the worst month at August 1990, when prices rose 397%. That is roughly eight times Cagan’s 50%-a-month threshold. It is also the highest peak month of the three Latin American episodes on this site. August 1990 is the Fujishock month too. Much of that 397% is the shock itself — controlled prices jumping to their real level in one announcement — not the underlying inflation the shock was sent to stop.

The Peru hyperinflation stabilisation used neither of the two mechanisms behind Zimbabwe’s or Argentina’s endings. There was no dollarization — Peru kept issuing its own currency throughout. There was no currency board pegging the sol to a reserve. Instead, the government cut the fiscal deficit directly. It ended most price controls and subsidies at once, let the exchange rate float, and stopped printing money to cover the gap between what the state spent and what it collected. That combination — a new currency plus a fiscal shock, not a monetary trick layered on top of the old one — is the third distinct ending pattern across the four episodes in our how hyperinflation ends comparison, next to Brazil’s gentler URV-based approach and Argentina’s currency board.

The shock’s success shows up directly in the deceleration sequence above: from 6,384.9% in 1990 to 230.6% the very next year is a bigger one-year drop than either Argentina’s or Brazil’s stabilisation produced. It also came at a steep, well-documented cost. Poverty rose sharply in Peru through 1990-91 as previously subsidized staples reached their real prices overnight, and the shock is remembered in Peru as much for that hit as for the inflation it ended. A stabilisation that works on a money-supply chart is one claim. A stabilisation that’s painless for the households living through it is another. Only the first is what our data can show.

Peru hyperinflation aftermath: what our own series shows, and where it stops

By our own calculation, growth came down through the rest of the 1990s, though not in every year: 29.3% in 1995, back up to 37.2% in 1996, then 30.8% in 1997, 17.3% in 1998, 14.5% in 1999, and negative for the first time in the whole series at −0.4% in 2000. The path down wasn’t perfectly smooth, but the direction over the decade was unmistakable — from a 6,384.9% peak to single digits within ten years.

Our own coverage runs out at June 2023, growing 2.0% year-on-year and 9.0% on a 10-year average — an 8.1-year doubling time, similar in shape to Brazil’s normalized pace but on data three years old. No free public money-supply chart of Peru’s 1990 episode turned up in our own research while building this site; if a fresher or longer one exists, tell us and we’ll link it. Peru’s full monthly history, current only through the same June 2023 cutoff, sits on our country page.

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