World Notes PERU

Lima went on a wild shopping spree last week as nervous consumers cleared store shelves of essential products like rice and oil in anticipation of shortages and steep price increases. The hoarding made an inauspicious start for President Alberto Fujimori, who began his five-year term last week without delivering an expected recovery plan to reduce rampant underemployment and curb the country's 3,000% 1989 inflation rate.

Right after taking office, Fujimori replaced the heads of the navy and air force, and declared a two-day bank holiday to give himself time to prepare his economic rescue program. But the President's economic team has been torn by disagreements, leading several members to resign. In a reversal of a campaign pledge not to resort to drastic shock-style policies, Fujimori hinted that he would cut price subsidies, raise taxes and streamline state-owned companies. Even by conservative estimates, such severe steps would cause inflation to skyrocket to 250% a month, exacerbate the recession and erode the salaries of the workers who elected Fujimori to help them.