Bloomberg — Consumer prices in Chile rose slightly more than expected last month, as central bankers warn of the threat of inflation, both domestic and international, ahead of their interest rate decision at the end of June.
Prices rose 0.3% compared to April, slightly above the median estimate of analysts surveyed by Bloomberg of 0.2%. The annual inflation rate rose to 4.1% in the linked series, as reported on Friday by the National Institute of Statistics.
Read more: Chile’s main economic authorities point out risks for inflation and growth
The Chilean monetary authorities, led by Rosanna Costa, are expected to slow the pace of interest rate reductions again this month with a quarter point cut. This week, Costa expressed her concerns about potential inflation drivers, from electricity increases to the resilience of the U.S. economy.
Despite these headwinds, the central bank sees consumer price growth slowing to the 3% target next year.
Transportation costs increased 0.6% monthly in May, due to the rise in fuel prices, while clothing rose 1.9%, according to the National Institute of Statistics. On the other hand, public services fell 0.3%.
Read more: Chile’s economy contracts for the second consecutive month
The annual inflation rate has picked up in the last two months, reflecting the effect of the rise in global transportation costs and the depreciation of the currency at the beginning of the year. Since then, the peso has regained some of its lost ground, gaining more than 8% in the last three months thanks to rising prices for copper, Chile’s main export product.
Looking ahead, electricity costs will be under pressure after Congress passed a law in April establishing gradual increases in rates that had remained low since a wave of social unrest in late 2019. Meanwhile, will make subsidies available to vulnerable households.
The Central Bank of Chile foresees annual inflation of 3.8% in December and 3% at the end of 2025, according to estimates published in April. Financial operators surveyed by the monetary authority foresee a growth in consumer prices of 3% in 12 months.
Read more at Bloomberg.com
