MercoPress. South Atlantic News Agency

November deflation in Chile, first time in 26 months

With fuel costs plunging Chile had in November its first month of deflation in 26 months with prices falling 0.1%, according to the latest release from the National Statistics Institute. The consumer prices index of October had been 0.9%.

Inflation in the eleven months of 2008 now stands at 8.4% and 8.9% in the last twelve months. Inflation in the twelve months to October had been 9.9%, highest in 14 years. Fuels and transport items which dropped 10.8& and 3.9% were decisive for the negative index. Chile has been suffering an exceptionally high inflation because rising international commodity prices pushed up the cost of fuel and power in Chile, which imports virtually all of its oil, and the worst drought in 50 years dried the dams that provide the country with its cheapest electricity. Other items: Food, up 1.1%; health services, 0.7%; house equipment, 0.4%; clothing, 0.3%; education and leisure, 0.2%; housing 0.1% and others, 1.5%. The price report was "negative in the numbers and positive for the country," Finance Minster Andres Velasco said at a conference in Santiago. "It's a welcome event that confirms the estimates both of the government and private analysts." Core inflation, which excludes fuel, fresh fruit and vegetables, rose 0.6%, while the annual pace accelerated to 9.5%. Last month, the central bank, which had expected 2009 inflation of 5.9% and growth of up to 4.5%, revised its forecasts to show inflation slowing to 4% next year, aided by growth of between 2 and 3%.