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(Bloomberg) — Chile’s monthly inflation was unchanged last month, surprising analysts who had expected a drop in fuel costs and subdued activity to help cause a decline in consumer prices.
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Prices were flat from May, compared to the -0.2% forecast from analysts in a Bloomberg survey. Annual inflation sped up to 4.3%, above the 3% target and the highest since September, the national statistics agency said Wednesday.
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Chilean market implied policy rates show odds of a quarter-point cut to borrowing costs within six months as the economy struggles and future inflation forecasts stay anchored at target. Gasoline and diesel costs have declined from levels reached in late March, when the government responded to the Middle East war by delivering the biggest fuel hike since at least 1980. Still, global uncertainty persists, and central bankers have said they will remain cautious.
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Energy costs declined 1.1% on the month in June, while transportation prices fell 1.3% driven by cheaper fuel, according to the national statistics agency. On the other hand, food and non-alcoholic beverages rose 0.8% during the period, representing a top driver.
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The Chilean report comes as global inflation risks persist. Earlier Wednesday, US President Donald Trump said a tentative ceasefire with Iran has ended, raising the prospect of an end to peace talks and a potential renewal of fighting between the two countries. Brent crude advanced 5% to around $78 a barrel.
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Previously, Chile central bankers had said it was necessary to wait and see if the Iran-US peace process consolidates before determining its impact, according to the minutes to their June policy decision, when they held rates at 4.5%.
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The central bank’s economic activity index fell in May after barely growing in April, according to data published July 1. Unemployment has also risen to 9.4%, the highest level since mid-2021.
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Analysts surveyed by the monetary authority in June see gross domestic product expanding just 1.6% this year.
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—With assistance from Robert Jameson.
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English (US)