(Updates with core prices in second paragraph, peso in fifth paragraph.)
Jan. 6 (Bloomberg) -- Chile’s annual inflation rate rose to 4.4 percent in December, exceeding the central bank target in a nation that has the second-highest borrowing costs among major Latin American rate-setting countries. The peso strengthened.
The median estimate of 12 economists surveyed by Bloomberg was for consumer prices to climb 4 percent in the year. Prices rose 0.6 percent from November, compared with the median estimate for a 0.2 percent gain. Core consumer prices, which exclude fuel and produce, grew 0.7 percent from November.
The jump in prices comes one month after the central bank forecast inflation in the top copper-producing nation would slow to 2.7 percent this year, according to its quarterly policy report. The bank, which targets inflation of 2 percent to 4 percent over two years, has kept its key interest rate at 5.25 percent for six months after raising it five times in 2011.
“The more adverse external panorama that we face will have consequences for growth and inflation in Chile, as well as the orientation of monetary policy,” bank President Rodrigo Vergara told Senators in a speech last month. “Inflation will dwindle down to about 3 percent in the first half of 2012.”
Annual inflation was the highest since April 2009, according to central bank data. Chile’s peso appreciated 0.5 percent to 507.63 per U.S. dollar as of 8:34 a.m. Santiago time from 510.17 yesterday.
Policy makers will reduce rates for the first time in more than two years this month to 5 percent, according to the median estimate of traders and investors in a Dec. 20 bank survey. Traders in the survey forecast monthly inflation of 0.1 percent in December.
--With assistance from Dominic carey in Sao Paulo. Editor: Philip Sanders, James Attwood
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