Chile Consumer Prices Unexpectedly Fall on Lower Transport, Finance Costs

Chilean consumer prices unexpectedly fell in August from the previous month as transport and financial costs slid, the National Statistics Institute said.

Prices declined by 0.1 percent from July, the Institute said today in a statement. The median forecast of 18 economists surveyed by Bloomberg was for prices to increase 0.2 percent. Annual inflation was 2.6 percent while prices excluding fuel and groceries slid 0.1 percent from July, the Institute said.

Financial costs declined in August as the government reversed a temporary tax on loans while the peso’s appreciation has pared import costs, Cristobal Doberti, chief economist at Bice Inversiones in Santiago, said in a Sept. 6 note to investors. The peso has appreciated 9.9 percent against the U.S. dollar this quarter, the best performer among 25 emerging-market currencies tracked by Bloomberg.

South America’s fifth-largest economy expanded a faster- than-forecast 7.1 percent in July from a year earlier, led by the retail, transport, communications and energy industries, the central bank said Sept. 6. The economy grew 1.5 percent in the first quarter and 6.5 percent in the three months through June.

“Our growth projections of 5 percent for this year are completely within reach,” Finance Minister Felipe Larrain said Sept. 6. “It’s possible to think we are going to slightly exceed 5 percent.”

Chile’s economy will expand 5 percent this year and 5.8 percent in 2011, according to the median forecast of 37 economists in a monthly central bank survey.

Economists in the survey estimated consumer prices would increase 0.4 percent in August from July and 0.5 percent in September.

To contact the reporters on this story: Randy Woods in Santiago at rwoods13@bloomberg.net; or Sebastian Boyd in Santiago at sboyd9@bloomberg.net

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