Chile’s CPI rises less than expected due to food costs

(Bloomberg) – Chile’s consumer prices rose less than expected in March, as a drop in food costs softened the blow from higher energy rates.

Consumer prices rose 0.4% from the previous month, less than the median estimate of 0.5% from analysts in a Bloomberg survey. Annual inflation stood at 2.9%, below the 3% target, the national statistics agency reported on Thursday.

Chilean Central Bank President Mario Marcel has said annual inflation will accelerate in the coming months due to rising energy costs before returning to its target in December. At the same time, the rest of the year will pass before Chile’s economic recovery from the pandemic takes hold. Taken together, policy makers noted that borrowing costs are likely to remain at an all-time low this year.

Prices for food and non-alcoholic beverages fell 0.4% from February, while energy increased 1.7%, according to the statistics institute. Core inflation, which excludes the more volatile food and energy prices, increased 0.5% during the period.

In recent weeks, the government has increased the communes that are under strict confinement measures in an attempt to slow the spread of the coronavirus. Those measures have raised the possibility of supply disruptions.

Chile’s inflation will average 3.4% this year, according to the central bank’s monetary policy report released on March 31. The monetary authority also raised its economic growth projection for 2021 to between 6% and 7%, citing an improved international context and a rapid national vaccination campaign against the covid.

Original Note: Chile Consumer Prices Rise Less Than Forecast as Food Costs Drop

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