Chile: Inflation rises in March; core inflation declines
Latest reading: Inflation ticked up to 4.9% in March, following February’s 4.7% and moving further above the Central Bank’s 2.0–4.0% target range. The increase was largely driven by increasing price pressures for food and non-alcoholic beverages.
More encouragingly, core inflation edged down to 3.6% in March from February’s 3.8%. Meanwhile, the trend pointed up slightly, with annual average inflation coming in at 4.5% in March (February: 4.4%).
Finally, consumer prices increased 0.50% over the previous month in March, picking up from February’s 0.39% increase but in line with market expectations.
Panelist insight: On the inflation outlook, Itaú Unibanco analysts said:
“Core inflation dynamics appear well-behaved. We expect consumer prices to rise between 0.1% and 0.3% in April (4.5% YoY). During the second half of the year, a milder electricity price adjustment is likely to materialize (+10bps), the first since January-25. We foresee a YE rate of 4.1%, with core inflation closer to 3.5%. Nevertheless, the effects of lower oil prices, potential trade diversion of ex-US manufactured goods to Chile, and a dent to domestic demand may lead to an even swifter disinflation process, outweighing the effects of the recent depreciation of the exchange rate in the context of low margins for firms.”