Chile’s September Prices Grow at Fastest Pace Since March

Chilean consumer prices increased in September at the fastest monthly pace since March on gains in transportation, food and beverages, indicating the central bank won’t follow Israel’s lead by cutting key interest rates.

Prices rose 0.5 percent from the previous month, matching the median estimate of 16 economists surveyed by Bloomberg. Annual inflation accelerated to 3.3 percent from 3.2 percent in August, while monthly core inflation, which excludes fuel and produce prices, was 0.3 percent, the National Statistics Institute said in a report today.

Consumer prices often climb in September as food and transportation costs increase during Independence Day celebrations, Cristobal Doberti, an economist at Bice Inversiones, said today. Rising salaries and producer prices may cause consumer prices to grow faster in future, he said.

“The central bank will keep rates on hold given the current scenario,” Doberti said by phone from Santiago. “A cut would be justified when we start seeing a bigger deceleration in internal demand. Companies continue to face price pressures, and whether they will pass those on to consumers will depend on internal demand.”

Producer prices rose 0.4 percent in September from the previous month, the institute said today. Salaries climbed 0.4 percent in August from July, it said yesterday.

Commodity Prices

The global economic slowdown will cause commodity prices to fall, reducing inflationary pressures in Chile and eventually giving policy makers space to reduce their rates, Leonardo Suarez, chief economist at Larrain Vial SA, said in an Oct. 3 report. Inflation may slow to 2.1 percent next year from 3 percent in 2011, he wrote.

“If the global economic scenario intensifies, we don’t rule out reductions in the monetary policy rate before December 2011,” said Suarez, who estimated monthly inflation of 0.4 percent to 0.5 percent for September.

Traders and investors surveyed by the central bank on Sept. 27 forecast policy makers would keep rates unchanged at 5.25 percent in October and cut to 5 percent by January.

Three-month interest rate swaps, which reflect traders’ views of rate decisions, rose 7 basis points, or 0.07 percentage point, to 5.12 percent today from yesterday.

Inflation will be 3.3 percent in December and 2.9 percent by the end of next year, the government’s budget office said in a presentation yesterday. The central bank, which estimates consumer prices will rise 3.3 percent in December, targets 3 percent inflation.

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