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PREVIEW-Chile to grow 0.3 pct in June vs May, CPI seen up

WHAT: Chile IMACEC economic activity data CLACTI=ECI for June and CPI data CLCPI=ECI for July.

WHEN: IMACEC: Thursday, Aug. 5 at 8:30 a.m. (1230 GMT). CPI: Friday, Aug. 6 at 9 a.m. (1300 GMT).

REUTERS FORECASTS: Chile’s economy is seen expanding by a median 0.3 percent in June compared to May, according to a Reuters survey of six analysts. Estimates ranged from a 1.1 percent contraction to 0.5 percent growth.

Chile’s economy was seen jumping 6 percent compared to June of last year, with growth estimates ranging from 5.5 to 6.5 percent, according to a poll of 11 analysts.

The median forecast for the July consumer price index showed a 0.7 percent increase in a separate poll of 20 analysts, with estimates ranging from a 0.4 to a 0.9 percent increase.

FACTORS TO WATCH: Analysts are keeping a close eye on domestic demand, especially greater dynamism in private consumption.

Estimates for year-on-year growth in June were reined in to below 6 percent because industrial output data for the same month came in lower than expected, analysts said.

Analysts attributed higher inflation to increased prices of perishable foods and greater volatility in that sector. They expect the impact of recent frosts on fruit and vegetable harvests to be reflected in higher consumer prices in coming months.

MARKET IMPACT: The IMACEC and CPI data would have to come in much higher than expected to significantly impact markets, analysts said.

The market continues to bet on a 50-basis-point benchmark rate increase coming from the central bank’s monetary policy meeting on Aug. 12, followed by further increases leading to an interest rate of 3.75 percent by year-end.

However, analysts said, if the IMACEC or CPI data comes in higher than expected, the bank could take more aggressive action to thwart inflation and opt for a 75-basis-point rate increase in August.

That would in turn lure investors to bring capital in from abroad, and consequent dollar sales would help boost the peso. (Reporting by Molly Rosbach and Maria Jose Latorre; Editing by Simon Gardner and James Dalgleish)

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