MercoPress. South Atlantic News Agency

Chilean inflation in September picks up; central bank to keep buying dollars

Copper exports recovering from output disruptions in August

Chilean inflation rose 0.5% in September and the trade balance narrowed as falling copper output forced the first monthly year-on-year fall in exports in over two years.

The 0.5% rise after August’s 0.2% was driven by food, transport and tobacco, government data showed on Friday.

The trade surplus fell to 324 million dollars in September, down sharply from a 2.012 billion surplus in the same month last year and below August's previously reported 490.66 million dollars surplus, the central bank said.

Exports totalled about 6.609 billion dollars during September, down 3.1% from September 2010 and falling from a year earlier for the first month since August 2009, while imports were around 6.285 billion, up 30.7% from a year earlier.

Copper export revenue totalled 3.305 billion, down from August's previously reported 3.609 billion and down sharply from September 2010's 4.256 billion, as the sector continues to recover from output disruptions in August.

Core CPI , which strips out prices for fuel, fresh fruit and vegetables, rose 0.3% in September after rising 0.2% in August.

Inflation in the 12 months to September was 3.3%, a shade higher than August's 3.2% but still close to the central bank's annual inflation target.

Chile's economic growth is seen slowing as high interest rates take effect, once dynamic domestic demand eases and global financial turbulence hits the crucial export sector.

Economic activity was flat in August from July, the central bank said last Wednesday, as growth moderates on the back of European debt woes and declining global demand.

The Central bank also announced it will keep buying 50 million dollars a day over the next month as part of a 12 billion program to raise reserves and limit the Peso’s gain.

The bank announced the continuation of its foreign exchange intervention as well as a 936 million bond-sale calendar for the month through Nov. 8 on its website. The central bank will also sell 463 million of bonds on behalf of the government.

The bank has bought 9.7 billion of US currency since it started the program in January. The peso has depreciated 11% against the greenback in the last month.