Chile: CPI increased +0.3% MoM in August, above expectations

Summary

CPI increased 0.3% MoM (+4.5% YoY), above both our expectations and those of the market (at 0.1% MoM). In general terms, as expected, the figure was driven by increases in the prices of foodstuffs although partly offset by transportation. Positive surprises came mainly from cigarettes prices, new automobile, rentals and apparels. With this print accumulated inflation in 2014 reached 3.1%. Core inflation increased at around 0.4% MoM, as also the one excluding food & energy. In this context, we expect September’ CPI inflation at a floor of +0.5% MoM, once again boosted by rising food prices, and surges in gasoline and transportation fares. Finally, based on the available information, we expect the Board should continue with monetary easing, with a 25bp cut in rates during this week’s meeting.

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