• Chile’s inflation seems to have stayed at 3.4 pct y/y in September

    Source: FxWire Pro - Commentary / 06 Oct 2016 08:39:51   America/New_York

    Chile’s inflation is expected to have remained the same in September. Inflation in the nation has been easing in 2016 and has dropped below the target ceiling for the first time in August to come in at 3.4 percent year-on-year that marked the lowest reading in more than two years. The headline inflation is likely to have stayed unchanged at 3.4 percent year-on-year, according to Societe Generale. On a sequential basis, inflation is expected to have come in at 0.6 percent.

    Since January, core inflation has also been slowing on a year-on-year basis. But on a sequential basis, core inflation is expected to have risen in September to 0.4 percent from 0.1 percent in August. Chile’s inflation has been on a downward path because of ongoing wage moderation, hesitant demand growth and a stabilizing peso.

    Since August, the CLP has strengthened 3.8 percent year-on-year as compared to an average pace of depreciation of 10 percent up to July. If all these factors continue to be in play in the future, inflation is expected to ease further, stated Societe Generale. But if the CLP depreciates from current levels, there is an upside risk. In the midst of all this, the Chilean central bank has remained in a wait-and-see mode since the beginning of 2016 given the weakness in growth.

    “With sub-trend growth and subsiding inflation, we expect the BCCh to continue its current level of monetary accommodation over the medium term”, added Societe Generale.

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