Chilean Prices Rise More Than Forecast as CPI Stays Above Targetby
Consumer prices rose 4.2% in June from the year earlier
Central bank kept interest rate unchanged at 3.5% last month
Chilean consumer prices rose more than expected in June, leaving the annual inflation rate above the target range, even as the country endures its third year of sluggish growth.
Consumer prices rose 4.2 percent from the year earlier, the National Institute of Statistics reported on Friday, the same pace as the previous month. The median forecast of 17 analysts surveyed by Bloomberg was for inflation to slow to 4.1 percent. In the month, prices gained 0.4 percent, the agency said.
Central bankers kept the key interest rate unchanged at 3.5 percent in June for a sixth month, while saying inflation may reach the 2 percent to 4 percent target range earlier than expected. Still, policy makers retained their tightening bias, highlighting that inflation has exceeded the target for most of the past two years. The central bank has its eyes on the Federal Reserve and might change its bias to neutral if the U.S. indicates rates will remain unchanged, said Euroamerica economist Felipe Alarcon.
"We expect inflation to fall within the target range in July, so it is possible that inflation stops being a problem for the central bank," Alarcon said by phone from Santiago. "They are likely to start focusing more on employment and economic activity."
The jobless rate rose to 6.8 percent in June, the highest in almost five years and up from 5.8 percent at the start of the year. The Imacec index, a proxy for gross domestic product, rose 1.8 percent in May from the year earlier, after climbing a mere 0.7 percent the month before, when heavy rains affected mining activity.