Chile’s Consumer Prices Drop

(Reuters) – Chile’s consumer prices posted their first monthly drop in June this year, the steepest since late 2023, according to data from the statistics agency INE, which was released on Tuesday. This decline fuels expectations that the central bank may resume monetary easing later this month.

Prices in the world’s largest copper producer fell by 0.4% in June compared to the previous month, surpassing the 0.12% decline anticipated by economists in a Reuters poll.

Six out of the 13 sectors surveyed noted price decreases for the month. Notably, INE stated that the price drops in the food and non-alcoholic beverages group, as well as in the apparel and footwear division, were significant.

Annual inflation in Chile reached 4.1%, according to INE, down from 4.4% the previous month and nearing the central bank’s target range of 2% to 4%.

The data supports the view that policymakers will likely resume their easing cycle with a 25-basis-point cut to 4.75% later this month, stated Kimberley Sperrfechter, an emerging markets economist at Capital Economics, in a note to clients.

Last month, Chile’s central bank kept its benchmark interest rate at 5% unchanged for the fourth consecutive meeting due to above-target inflation and global uncertainties, although it mentioned that a 25-basis-point cut had been considered.