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Economy in Brief

Consumer Prices Quiescent in Chile, but Wholesale Prices Surge
by Carol Stone November 4, 2004

Consumer inflation in Chile remains quite mild. Through October, for which data were published this morning, the total CPI was up just 1.9% from October 2003, and the rate excluding food and energy was a mere 0.9%. These rates are actually "high" compared with earlier this year and late in 2003, when year-on-year comparisons showed modest deflation. Food, clothing and home furnishings all show declining prices, though the pace of decline has recently moderated. By inference, energy seems to be the main source of price increase. Housing and transportation costs are erratic, so a trend is hard to characterize.

At the same time, wholesale prices in Chile have been very strong, with October's level nearly 9% above a year ago. Chile's industry is dominated by commodity production, particularly copper, and copper prices have exploded. On London metals markets, the spot price averaged $3,010.96/metric ton in October, up a whopping 57% from October 2003. This is apparently demand-driven. It is a accompanied in Chile by rising output; mining production overall was 12.7% higher in the third quarter than a year ago and exports of copper, valued in US$, were up 104% in the second quarter and 88% in the third from the year- earlier amounts.

% Changes Oct 2004 Sep 2004 Aug 2004 Year/Year
2003 2002 2001
CPI (SA) 0.2 -0.3 0.2 1.9 2.8 2.5 3.6
CPI ex Food & Energy (SA) -0.2 -0.1 0.2 0.9 2.3 2.6 3.1
WPI (SA) 2.4 -2.3 0.5 8.9 6.6 6.8 7.8
Copper* 3.9 1.9 1.3 56.9 14.1 -1.3 -12.9
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