Chilean consumer prices fell 0.1% in May, the government’s statistics agency INE said on Friday, as costs of many goods and services stagnated amid the growing coronavirus outbreak in the country.
The price of transportation, hotels and restaurants all dropped, as did such staples as chicken and beer. The price of food and non-alcoholic beverages overall stayed steady versus the previous year, the agency said.
The numbers erased out early concerns that price gouging would dominate markets as panic over the pandemic and potential shortages set in, Finance Minister Ignacio Briones said.
“This is good news for families, because what interests us ... is that they hope they can maintain their purchasing power,” Briones added in a video statement.
Annual inflation hit 2.8%, tending towards the low end of the central bank´s 2% to 4% target range as prices have sagged.
Santander said in an analyst´s note the numbers reflected low inflationary pressure overall in Chile, the result of bargain fuel prices and plummeting demand in the tourism and service sectors.
“Going forward, we project that the monthly price increases will be limited...and the annual variation...could close the year again close to 2%,” the bank said.
Chile, long hailed as one of Latin America´s most stable economies, is now in the throes of the pandemic, reporting nearly more than 120,000 total coronavirus cases and some 1,500 deaths. The crisis has devastated the economy of the world’s top copper producer.
Economic activity plunged 14.1% in April from the same month a year ago, the central bank said, the steepest drop in at least 34 years.
Economists widely predict double-digit unemployment and a sharp drop in gross domestic product by year´s end.