INE records lowest ever September inflation figures

SANTIAGO – Banks, the government and the public were shocked on Thursday as the IPC (Consumer Price Index) for September was announced as being -0.2%. It is the first time since records began that negative inflation has been recorded in the month of the Fiestas Patrias.

According to the INE (National Institute of Statistics), out of the twelve indices measured, seven presented negative inflation, and five showed positive inflation. The result brings total inflation in 2017 to 1.4%, and 1.5% in the last 12-month period.

The greatest reductions were seen in the sectors of Food and Non-alcoholic Drinks (-0.6%), and Housing and Basic Services (-0.4). In contrast, the largest increases were recorded in Transport (+0.6%), Goods and Services (+0.3%) and Hotels (+0.3%).

More specifically, large decreases were announced in the prices of produce, especially in lettuce (-8.8%) and tomato (-5%). The report by the INE suggests that this is due to “larger quantities being offered in the market by producers in the north of the country”.

Additionally, large falls were registered in the price of package holidays (-6.9%). According to the report, these decreases are caused by “commercial strategies applied in order to increase the number of clients, due to the low season” and the “influence of the decline in the value of the dollar”.

Historically, the month of the Fiestas Patrias has always shown a rise in inflation and studies by Bloomberg had predicted a positive rise of 0.3%. Banco Chileno (BC) itself had forecast a rise of 0.2-0.4%, and this unpredicted fall could cause some changes in the loans and interest rates.

According to Pulso, RogrigoAravena, the Chief Economist for the BC said last week that “if they record unpredicted falls in inflation in September or October, the BC will reduce interest rates in a preventative action”.