* 12-month CPI 1.5 percent, well under central bank's 2-4
* Lower food, beverage prices help ease December CPI
* Higher housing, water, electricity, gas prices offset
By Anthony Esposito and Antonio De la Jara
SANTIAGO, Jan 8 Chile's consumer price index was
flat in December, slightly below market expectations, as lower
food and non-alcoholic beverage prices offset increases in the
housing, water, electricity and gas sectors, the government said
Inflation in the 12 months to December was 1.5 percent, well
below the central bank's target range of 2 percent to 4 percent
and the lowest rate since at least December 2011, according to
the INE government statistics agency.
Banchile Inversiones brokerage said in a note to clients
that despite the low annual inflation figures, data on economic
activity suggests higher inflationary pressures.
"We therefore expect the central bank to hold (interest)
rates at 5 percent again at its Jan. 17 meeting," the brokerage
The central bank has kept rates steady since a surprise cut
in January 2012 as it weighs external risks against a buoyant
Thanks to robust domestic demand and investment, Chile's
small, export-dependent economy has mostly fared better than
expected despite slowing demand from top trade partner China and
fallout from the euro zone crisis.
The Andean country's economy is believed to have expanded
roughly 5.5 percent last year, according to government
"This is the biggest difference between growth and inflation
we've had in at least a half century," Finance Minister Felipe
Larrain said later on Tuesday. "We've searched back to 1960 and
there's no year in which growth tops inflation by so much in
December's CPI follows an unexpected 0.5 percent decrease in
November, a surprisingly high 0.6 percent rise in October, and a
stronger-than-expected 0.8 percent increase in September.
Traders polled by the central bank had forecast 0.1 percent
inflation in December.
Core inflation was 0.3 percent in December, the INE said.
Chile's robust economic growth beat expectations again in
November on an uptick in services, mining and retail, while the
trade surplus widened in December to the biggest in more than a
year, the central bank said on Monday.
The bank is expected to keep interest rates steady at 5
percent over the next six months, although it may raise them
slightly earlier than previously thought, the bank's fortnightly
poll of traders suggested late last month.