The government on Saturday devalued Peru's currency by 16.6 percent in an effort to boost exports and reduce deficit spending.

Officials have blamed inflation - which reached a record 1,722 percent last year - for Peru's fiscal and trade deficits.The Economy Ministry said Saturday that March consumer prices rose 42 percent over prices in February.

Officials have said inflation will continue to grow in the short term because of price increases but will eventually decline as the economy stabilizes.

Earlier in the week, the government increased by an average of 20 percent the prices of gasoline and subsidized foods such as wheat, cooking oil and rice.

The devaluation, announced in the official El Peruano newspaper, pushed the official exchange rate to 1,440 inti to the dollar, up from 1,200 to the dollar.

The government uses the exchange rate to pay exporters and to finance imports of vital drugs and food staples. The floating free market rate, which registered 1,550 intis to the dollar Saturday, is used for nearly all other transactions.