Chile: CPI inflation reached +0.2% MoM in July, in line with expectations

Summary

CPI increased 0.2% MoM (+4.5% YoY), in line with both our expectations and those of the market. As expected, the figure was driven by increases in the prices of foodstuffs and transportation, although this was partly offset by apparel. With this print accumulated inflation in 2014 reached 2.8%. Core inflation measures remain subdued with increases of 0.2% MoM, while the one excluding food & energy with null monthly variation. In this context, we forecast Augusts’ CPI inflation not higher than +0.1% MoM, once again boosted by rising food prices that should be compensated by negative contributions from urban transportation fares and gasoline prices. Finally, based on the available information, the Board should consider as policy options a 25bp or 50bp cut in rates at Augusts’ meeting.

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