Inflation in Chile Stalls – A Moment of Relief
September 2024 brought a much‑needed breather for Chile’s consumer prices. The annual inflation rate slid to 4.1%, down from a nine‑month high of 4.7% in August. It’s the first drop after five consecutive months of rises, giving shoppers and the Central Bank a welcome sigh of relief.
Monthly Numbers – A Quiet Shift
- Consumer price rise (monthly): 0.1% – below the 0.3% bump seen in August and under analysts’ expectations.
- Food & non‑alcoholic drinks: –0.5%
- Alcoholic drinks & tobacco: –0.4%
- Transport: –0.3%
These slips made the price drift gentle, with most sectors slowing down while some, like transport, actually fell.
Why the Price Push Back?
It’s all thanks to more affordable production costs. Producer prices leapt 9% year‑on‑year in August – the lowest in five months – after a 14.5% rise in July. Mining and manufacturing, the backbone of Chile’s economy, saw costs shrink, letting buyers feel the savings.
Impact on the Central Bank of Chile
The hotter the inflation overheats, the less room the bank has to slash rates. With the annual rate nudging past the top of the 2%‑to‑4% target range, the Central Bank gains bandwidth to continue cutting interest rates. Although it took a cautious stand recently, the current slowdown signals it’s likely to resume easing in upcoming meetings, boosting growth.
Currency & Global Influences
- Chilean peso slipped ~1% as the U.S. dollar strengthened and global tensions loomed.
- Chile’s key trading partner, China, sighed out weak stimulus measures, denting confidence in the peso.
- Copper prices, a vital export, dropped 2%, adding extra pressure on the local currency.
In short, September’s inflation cool‑down is a win for Chile’s financial stability. Lower consumer and producer prices create a fertile environment for the Central Bank to keep cutting rates, which could spark broader economic recovery. Still, the peso’s future hinges on China’s performance and the U.S. dollar’s vigor. Keep an eye on these global currents as Chile navigates its post‑inflation path.
