LIMA, June 1 (Reuters) - Consumer price index for Lima fell 0.42 percent in May, the second straight monthly negative reading as food prices continued to fall after a flood-related spike earlier this year, state statistics agency Inei said on Thursday.
The drop was sharper than the median forecast of a 0.09 percent decline in a Reuters poll.
The annual inflation rate fell to 3.04 percent from 3.69 percent, and the price index has risen 1.18 percent so far this year, Inei said.
In March, consumer prices rose 1.3 percent, the highest level in about two decades due largely to the impact of severe flooding on food prices. Prices then fell 0.26 percent in April as the impact receded.
Earlier this week, central bank chief Julio Velarde said inflation would fall in May by around 0.4 percent and that the monetary authority was hoping to end the year with annual inflation at 2.3 percent. (Reporting by Teresa Cespedes; Writing by Luc Cohen; Editing by Gopakumar Warrier)