Peru is one of the top shopping destinations in Latin America, with some of the finest and best-priced crafts anywhere. Its long traditions of textile weaving and colorful markets bursting with tourists have produced a dazzling display of alpaca-wool sweaters, blankets, ponchos, shawls, scarves, typical Peruvian hats, and other woven items. Peru's ancient indigenous civilizations were some of the world's greatest potters, and reproductions of Moche, Nasca, Paracas, and other ceramics are available. (Until recently, it was surprisingly easy to get your hands on the real thing, but that's no longer the case.) In some cities -- especially Lima, Cusco, and Arequipa -- antique textiles and ceramics are still available. Some dealers handle pieces that are 1,000 years old or more (and others simply claim their pieces are that old). However, exporting such pre-Columbian artifacts from Peru is illegal.
Lima and Cusco have the lion's share of tourist-oriented shops and markets -- particularly in Lima, you can find items produced all over the country -- but other places might be just as good for shopping. Locals in Puno and Taquile Island on Lake Titicaca produce spectacular textiles, and Arequipa is perhaps the best place in Peru to purchase very fine, extremely soft baby-alpaca items. Handcrafted retablos (altars) from Ayacucho, depicting weddings and other domestic scenes, are famous throughout Peru and are available across the country. The Shipibo tribe of the northern Amazon produces excellent hand-painted textiles and decorative pottery. You'll also see items in the jungle made from endangered species -- alligator skins, turtle shells, and the like. Purchasing these items is illegal, and it only encourages locals to further harm the natural environment and its inhabitants.
Baby alpaca and very rare vicuña are the finest woolens and are amazingly soft. Although many merchants are happy to claim that every woven wool item in their possession is alpaca or baby alpaca, much of what is sold in many tourist centers is anything but. Most, if not all, of the inexpensive, lookalike (S/15-S/60) sweaters, shawls, hats, and gloves you'll see in countless markets and stalls are made of acrylic or acrylic blends, and some even are blends of natural fibers and fiberglass. (A trekking guide in Cusco recently told me only partly in jest that you have to listen closely to people hawking cheap alpaca goods; they aren't saying "baby alpaca," but "may be alpaca.") If your new "alpaca" sweater stinks when it gets wet, it's llama wool. If you want the real thing -- which is not nearly as cheap but still much less expensive than what you'd pay for alpaca of such fine quality in other countries -- visit one of the established chain stores in large cities (most have "alpaca" in the name). Arequipa is one of the finest centers for alpaca goods, though Cusco and Lima are also excellent places to shop for alpaca.
The artesanía (popular arts) center par excellence of Peru is the highlands city of Ayacucho. The distinctive ceramic churches and retablos that are mainstays of handicrafts shops across Peru all come from Ayacucho (and a couple of small towns nearby), although a number of artisans have relocated to larger cities to more effectively market their wares.
In Lima, Cusco, and most tourist centers, there are scores of general, look-alike artesanía shops, and prices might not be any higher than what you'd find at street markets. At stores and in open markets, bargaining -- gentle, good-natured haggling over prices -- is accepted and even expected. However, when it gets down to ridiculously small amounts of money, it's best to recognize that you are already getting a great deal on probably handmade goods and you should relinquish the fight over a few soles.
Many prices for goods include a 19% sales tax, which, unfortunately, is refundable only on purchases made at the international departure lounge of Jorge Chávez International Airport.
Note: This information was accurate when it was published, but can change without notice. Please be sure to confirm all rates and details directly with the companies in question before planning your trip.