Chile: Higher than expected inflation in October

CPI inflation increased 1.0% MoM (+5.7% YoY), above both our and market expectations (BBVAe: +0.5% MoM; Consensus: +0.4% MoM). As expected, the print was driven mainly by positive contributions from perishable food, soft drinks, beverages and tobacco. Surprises came from a higher than expected diffusion rate, with rises in 65% of products in the CPI basket (BBVAe: 57%). Core inflation measures increased in a range of between 0.4%/0.7%. Overall, there is a combination of effects in October’s CPI related to exchange-rate pass-through -with tradable inflation rising 1.5% MoM in the month- and one-round effects of the tax reform. With this print, a downward bias is expected for short-term inflation figures during the rest of 2014.

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