Chile: Inflation drops further below Central Bank's target in September
October 6, 2017
Consumer prices fell 0.2% in September compared to the prior month, contrasting August’s 0.2% rise and confounding analysts’ expectations of a month-on-month price rise. According to the National Statistical Institute (INE), September’s fall was underpinned by lower prices for food and non-alcoholic beverages, clothing and footwear, and recreation and culture.
Inflation came in at 1.5% in September, down from August’s 1.9%. As a result, inflation remained outside the Central Bank’s 2.0%-4.0% tolerance range for the fourth consecutive month. Markets took the weak inflation figure as a sign that further monetary easing could be imminent, with the Chilean peso losing value shortly after the announcement. This was despite the Central Bank making clear at its most recent policy meeting its preference for leaving rates unchanged in the short term. After stripping out volatile categories such as oil, fresh fruit and vegetables, core consumer prices dipped 0.2% month-on-month in September, down from August’s flat reading, while core inflation ticked down from 1.9% to 1.7%.
Author: Oliver Reynolds, Economist