By Antonio De la Jara and Anthony Esposito
SANTIAGO Nov 8 Chile's consumer prices rose by
double what the market expected in October, chiefly due to the
cost of food, non-alcoholic beverages, housing and electricity,
the government said on Thursday.
The CPI index jumped 0.6 percent month on month
in October, outpacing the 0.3 percent monthly increase that
analysts polled by Reuters had forecast.
This follows another unexpectedly high 0.8 percent rise in
September, a 0.2 percent increase in August and a flat reading
"You're starting to have inflation that's more in line with
the economy's reduced output gaps ... it better reflects the
cyclical situation of the Chilean economy," said Alejandro
Puente, chief economist at BBVA in Santiago.
"Looking forward, we clearly see more inflationary
pressures, but with a lot of volatility in the short term," he
Finance Minister Felipe Larrain has often emphasized that
Chile's robust economic growth, seen at around 5 percent this
year, is coupled with moderate inflation.
Chile's small, export-dependent economy has been expanding
at a brisk pace despite slowing demand from top trade partner
China and fallout from the euro zone's ongoing fiscal crisis,
helped by firm domestic demand, a tight labor market and
relatively healthy prices for main export copper.
The minutes of the central bank's latest monetary policy
meeting, released on Tuesday, highlighted "the strength of
domestic demand, and in particular consumption."
Core inflation was 0.2 percent month on month in October,
and inflation in the 12 months to October was 2.9 percent.
It was the fifth month in a row that annual inflation
remained below the midpoint of the central bank's 3.0 percent
policy horizon inflation target.
The central bank held its key interest rate
steady at 5.0 percent as expected for a ninth consecutive month
in October, as the buoyant domestic economy helped keep external
risks at bay.
The key interest rate is seen staying at 5.0 percent in
November and in the next three, six, 12 and 24 months, the
bank's fortnightly poll of traders showed late last month.
BBVA's Puente also sees the central bank holding the key
interest rate at 5.0 percent through the end of 2013, though he
added there's a slight risk of a rate hike before that.