Bloomberg News

Chile November Inflation Surges to 3.9%, Fastest Since 2009

December 13, 2011

(Updates with central bank survey in fifth paragraph.)

Dec. 7 (Bloomberg) -- Chile’s annual inflation accelerated to a faster-than-forecast 3.9 percent in November, the highest rate since April 2009, the National Statistics Institute said.

The median estimate of eight analysts surveyed by Bloomberg was for inflation of 3.7 percent. Consumer prices increased 0.3 percent in November from the month before, while core inflation, which excludes fuel and produce, was 0.2 percent in the same period.

The central bank, which targets 3 percent inflation, has kept borrowing costs unchanged at 5.25 percent since July. Inflation has accelerated every month since then, even as the economy weakens, expanding at its slowest pace in more than 18 months in October. The government and central bank are prepared to stimulate the economy if Europe’s debt crisis damps growth further, policy maker Manuel Marfan said Dec. 5.

“We are worried about the north wind in the global economy and how the transmission mechanisms can arrive to our coast,” he said in an interview in Santiago. “We have a very maneuverable set of policies with lots of degrees of freedom both on the fiscal side and the monetary side.”

Policy makers will reduce rates by a quarter-point to 5 percent next week even after inflation accelerated, according to the median estimate of 59 traders and investors in a central bank survey published today. The bank will reduce borrowing costs to 4.75 percent by March and 4.5 percent by June, the poll said.

While Chile has left rates unchanged, Brazil has cut three times since August. Brazil’s gross domestic product contracted 0.04 percent in the third quarter from the previous three months, compared with an expansion of 0.64 percent in Chile.

--With assistance from Sebastian Boyd and Eduardo Thomson in Santiago. Editors: Philip Sanders, Harry Maurer

To contact the reporter on this story: Randall Woods in Santiago at rwoods13@bloomberg.net.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.


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