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Economy in Brief

Chilean Inflation Eases in May After Energy-Driven Surge in April
by Carol Stone June 3, 2005

Consumer prices in Chile slowed last month after a strong rise in April. The total CPI was up 0.4% (seasonally adjusted by Haver) following 0.7%. This helped the 12-month inflation rate ease to 2.7% from 2.9%. Energy prices were evidently the main mover in both the April surge and the May moderation; transportation prices had risen a mere 0.2% in March, but leaped 2.2% in April and were still strong but less so in May with a 1.3% rise.

Chilean inflation generally remains well under control. Excluding food and energy, the CPI was up 2.4% over May 2004. This is a higher rate than what prevailed over the previous three years by about 0.7 percentage point. But the firming has come mainly from reduced rates of deflation in clothing prices and home furnishings, not from a measurable reacceleration of some sector; indeed, housing costs, health care and education are basically trendless near the overall inflation rate.

Inflation in Chile also remains notable relative to its neighbors. Argentina still struggles with more than 8% and Brazil with about 7%. Among South American countries, only Ecuador and Peru have slower inflation than Chile. For Ecuador, the slower pace is new just in the last three or four years. Peru's inflation has been a bit lower than Chile's since early 2001, but Peru was experiencing much more dramatic rates until well into the mid-1990s.

  May 2005 Apr 2005 Mar 2005 Year/ Year
2004 2003 2002
Total CPI 0.4 0.7 0.3 2.7 2.4 1.1 2.8
ex Food & Energy 0.5 0.3 0.1 2.4 1.8 1.6 1.8
Food 0.2 0.2 0.2 1.8 0.2 -0.8 3.5
Transportation 1.3 2.2 0.2 6.7 9.1 0.3 3.5
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