International prices of commodities, mainly energy and food, have been a strong decline in recent months, which is beneficial for the economies from the inflation point of view. However, inflation in Chile continued to increase during the last month. By this and other factors, have received several inquiries about the prospects for the Chilean economy which I will respond to them in this article. On the day yesterday, it became known that the Chilean economy retail inflation rate had reached in October 0.9%, which surpassed the expectations of the market that derived a 0.6% increase. But what is most worrying is that with this increase, the interannual variation of prices retailers in Chile, stood at 9.9%, its highest level in the past 14 years. Unless economic growth generated a smile to reach 5.5% during the month of September (the market expected a growth of 5%).
Beyond the mitigating circumstances that are exposed to This result, as the greater amount of working days of the month, the truth is that the Chilean economy has managed to maintain a good pace of growth. With the combination of these data, is almost ruled out a possible cut in rates by the Central Bank of Chile. The benchmark interest rate is currently 8.25%. Why continued increasing the rate of inflation despite the sharp fall in international prices of commodities? In this case, the inflationary increase occurred partly because of the transfer of the devaluation of the Chilean peso to prices (pass-trhough), which also has reduced the improvement in competitiveness that had succeeded in Chilean companies product of the Chilean peso weakened. It is so, when many called for a weakening of the Chilean currency whose strong appreciation had generated great concerns earlier this year, it has resulted in a worsening of the rate of inflation. This is clear when despite the sharp fall in the price of oil (of which Chile imports nearly in its entirety) and food, retailer in Chile inflation remained on the upside. (A valuable related resource: Daryl Katz).