Consumer prices rose 5.3% from a year prior, less than the 5.6% median estimate of analysts in a Bloomberg survey. It was the lowest annual rate since September 2021. Monthly inflation stood at 0.1%, below all economist forecasts, the national statistics institute reported on Friday.
Chile’s inflation is extending its slide toward the 3% target, coming down from the peak of 14.1% hit last year. That slowdown has already allowed the central bank to deliver back-to-back rate cuts and signal that more reductions are coming. Still, economists warn of numerous price threats, including a weaker peso, wage increases and costlier food in the aftermath of recent floods.
Transportation costs fell 0.2% on the month in August, while household items declined 0.3%, according to the statistics agency. On the other hand, energy gained 1.6% and food and non-alcoholic beverages rose 0.3%. Policymakers also reiterated that borrowing costs will end the year at 7.75%-8%, below the current level of 9.5%. They cut rates by a full percentage point in July before slowing the pace to a 75-basis-point reduction this month.Traders polled by the central bank in August see annual inflation at 3% in two years and the key rate tumbling to 5% over the next 12 months.