MercoPress. South Atlantic News Agency

Chile’s consumer inflation falls in April, but still above official target

The central bank is expected to keep tightening monetary policy

Chile’s consumer prices rose 0.3% in April from March, reported the National Statistics Institute. Annual inflation reached 3.2%, down from 3.4% a month earlier, and 1.6% in the first four months of 2011.

The Chilean central bank estimates annual inflation will exceed its target range of 2% to 4% by year-end on higher fuel prices. April price data and falling oil prices could indicate that inflationary pressures are subsiding, which may give the bank more time to raise rates to a neutral level.

Chile’s central bank has raised interest rates in 10 of its last 11 monthly meetings. Policy makers accelerated the pace of increases to a half-point in the last two meetings, saying in statements accompanying the decision they would continue to remove the monetary stimulus.

Central bank inflation estimates in Chile have increased because of higher oil and food prices, policy makers said in their monthly meeting in April.

“Total inflation was expected to temporarily cross the upper limit of the range of tolerance because of the impact of increased food and energy prices” according to the minutes of the meeting, which added that “those effects could be limited and transitory.”

Food and beverage as well as utility prices rose 0.7% in April from the previous month, according to INE. Transportation prices rose 0.4% as communications and clothing prices slipped 0.6% and 0.1%, respectively.