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Chile Inflation November 2023

Chile: Inflation falls to over two-year low in November

Inflation edged down to 4.8% in November from October’s 5.0%. November’s result marked the lowest inflation rate since August 2021, but was still above the Central Bank’s 2.0%–4.0% target range. Looking at the details of the release, prices for food and non-alcoholic beverages grew at a softer rate in November, while transportation prices dropped at a quicker pace.

Accordingly, the trend pointed down, with annual average inflation coming in at 8.3% in November (October: 9.0%). Meanwhile, core inflation fell to 4.7% in November, from the previous month’s 4.8%.

Finally, consumer prices increased 0.75% from the previous month in November, accelerating from the 0.44% rise logged in October. November’s uptick was the highest reading since March, and well above market expectations.

Higher-than-expected price pressures could limit the scale of monetary easing at the Central Bank’s mid-December monetary policy meeting, though another rate cut is still highly likely.

On the monetary policy implications, Itaú analysts said:

“The less favorable November CPI print may bolster views to persist with the 50bp rate cut pace. However, the loosening of global financial conditions and the appreciation of the CLP since the October meeting, along with inflation expectations that are anchored or slightly below the target means a larger cut cannot be ruled out.”

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