(Adds graphic, economist comment)
SANTIAGO, May 8 (Reuters) - Chile's annual rate of
consumer price increases in April fell to its lowest in more
than a year, data from statistics agency INE showed on Monday,
dropping below the 10% level as economists project a monetary
easing cycle to start in the coming months.
Inflation in the world's largest copper producer hit 9.9% in
the 12 months through April, the lowest since March 2022,
slowing from the 11.1% reported in March although still well
above the central bank's target range of 2% to 4%.
Chilean inflation is expected to keep falling in the next
months, with traders recently polled by the central bank
forecasting it to hit 4.1% within a year, a scenario that could
trigger interest rate cuts as soon as July.
"Today's numbers will allow the central bank to breathe
a sigh of relief, as they confirm that the disinflation is now
underway," Pantheon Macroeconomics' Chief Latin America
Economist Andres Abadia said. "Interest rate cuts are coming
soon."
The central bank has been holding its benchmark rate at
11.25% since October of last year as it tries to rein in
stubbornly high inflation resulting from the country's rapid
post-pandemic economic recovery.
Economists at JPMorgan noted that core inflation, a key
metric for policymakers, remained high but seemed aligned with
the central bank's scenario, maintaining their call for monetary
easing to start in early third quarter.
"Though further risk premium decompression in political
developments and negative sequential growth expected for 2Q23
make the June policy meeting a live one when it comes to policy
action," they said.
In April, according to INE, consumer prices in the Andean
nation rose 0.3%, below market forecasts and decelerating from
the 1.1% increase seen in the previous month. Economists polled
by Reuters had expected a 0.4% rise last month.
The monthly increase was driven by higher healthcare and
transportation costs, which rose 1.5% and 0.8%, respectively,
partially offset by a 1.7% drop in prices in the leisure
category.
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Chile inflation rate falls to a one-year low in April ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Natalia Ramos and Gabriel Araujo; Editing by
Steven Grattan and Andrea Ricci)
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