MercoPress. South Atlantic News Agency

Negative inflation in Chile.

Chilean retail prices in July dropped 0,1%, with an accumulated inflation of 1,5% in the seven months of 2003 and 3,1% in the last twelve months according to the latest release from the Chilean Institute of Statistics.

The ?0,1% drop was pushed by a ?0,9% decrease in clothing and moderate negative variations in Health ?0,3%; Education ?0,2%; Housing ?0,1% and Others ?0,3%. Transport remained neutral while Food was the only positive item, 0,3%. Fish and seafood (2,7%), dairy and poultry (2,4%) had a particular incidence although Fruit and Vegetables actually dropped 0,9%.

In spite of the good consumer prices index, Chilean government officials in a hearing before the Congressional Joint Economic Standing Committee said that the Chilean economy this year will be expanding 3,5% instead of the 4% forecasted at the beginning of the year.

"This year has been more positive for Chile, but the world economy recovery is still sluggish and the international copper market remains bearish", indicated Mario Marcel Director of the Budget and Planning Office.

As to other forecasts Mr. Marcel said the government is working on the basis of a 0,7% GDP deficit and 2003 inflation between 3 and 3,3%.

With July's last week figures still pending, Chile's trade surplus stands at 2,028 billion US dollars; exports in the seven months of 2003 totaled 11,697 billion US dollars and imports 9,668,6 billion US dollars.

Central Bank international reserves at the end of July reached 15,571 billion US dollars following a 81,4 million US dollars increase during July.