MercoPress. South Atlantic News Agency

Chile’s inflation slowed to its lowest level in seven months in April

Economy minister Longueira described the performance as “outstanding”

Chile's consumer price inflation slowed to the lowest level in seven months in April, data released by the National Institute of Statistics showed on Tuesday.

The consumer price index increased 3.5% on an annual basis in April, slower than the 3.8% gain recorded in March. The latest growth was the smallest since September 2011, when prices advanced 3.3%. Economists were looking for an inflation rate of 3.7% for April.

In the first four months of the year the consumer prices index accumulated 0.7%.

Food and non-alcoholic beverages prices climbed 8.4% annually in April, while clothing and footwear prices decreased 5.1%. There was a 0.6% annual increase in housing costs and utility prices during the month, and a 4% gain in transportation costs.

On a monthly basis, consumer prices edged up 0.1% in April, following a 0.2% increase in the previous month. Economists expected the index to rise 0.2% month-on-month.

At the same time, consumer prices excluding fuel and food items increased 2.6% annually in April. Month-on-month, the index dropped 0.2%, contrary to economists' forecast for a 0.2% increase

Given the performance in April which is in line with the inflation target for the next 12 and 18 months, the Central bank is expected to maintain the basic interest rate unchanged at the meeting of the monetary policy council in May.

Economy minister Pablo Longueira described the performance of the Chilean economy as “outstanding” and it’s not mere chance, on the contrary “it’s the result of the policies implemented by the government”

“In spite of an adverse global scenario Chile has a healthy vigorous economy with rising salaries, more jobs and less inflationary risk”, said Longueira, anticipating 5% growth in 2012 with contained inflation.

However Finance Minister Felipe Larrain was a bit more cautions on his comments and warned that despite robust growth and retreating inflationary pressures, the Chilean economy is not immune to a “complex international outlook”.

Larrain applauded the latest data which showed that GDP is likely grew 5.2% on the year in the first quarter and 12-month inflation in April retreated to 3.5%. But the minister also cautioned recession in Europe, slower growth in China and fiscal uncertainty in the US as a result of the so-called “fiscal cliff” could all have repercussions on Chile.

The Chilean economy is highly dependant on foreign trade as it's the world's leading producer of copper and a large exporter of other natural resources such as wood pulp, fresh fruits, molybdenum, lithium and iodine.