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Chile Inflation February 2023

Chile: Inflation moderates in February, but core inflation rises further

Inflation dropped to 11.9% in February from January’s 12.3%. February’s result represented the lowest inflation rate since May 2022. The decline was broad-based, with lower price pressures recorded for food and non-alcoholic beverages, housing, utilities and fuel, and transportation. That said, inflation was still roughly four times the Central Bank’s 3% target.

Consumer prices dropped 0.06% from the previous month in February, contrasting the 0.80% rise seen in January and confounding market expectations of an increase. February’s result marked the weakest reading since November 2020.

Finally, core inflation rose to 9.1% in February, from the previous month’s 8.6%.

On the implications for monetary policy, analysts at Itaú Unibanco said:

“Despite the negative headline reading, core inflationary pressures remain elevated, hence the February CPI data is unlikely to prompt a rate cut in the near term as the Board would favor seeing a consolidated downward trajectory on the core inflation front. We expect rate cuts to begin in June.”

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