MercoPress. South Atlantic News Agency

Inflation in Chile at record level since June 1994

The Chilean central bank said foreign investment in the first half of the year reached US$ 9,6bn, which is 17% higher than the average of the last five years

Inflation in Chile reached 0,9% in June, 7,1% in the first half of the year and 12,5% in the last twelve months, which is the highest since 28 years, in June 1994.

According to the latest report from the National Stats Institute, INE, seven of the twelve chapters of the Consumer Price Index reported significant advances during the month of June.

In effect, Transport was 2,6% higher and Food and beverage 1,2% had the main impact, while Clothing and Shoe wear were down 1,3%. Nevertheless there are some positive signs, markets were expecting a CPI increase of 1% in June, and the influx of foreign investment in Chile remains strong despite all the uncertainty created by the new government and the constitutional assembly.

According to the Chilean central bank, foreign investment in the first half of the year reached US$ 9,6bn, which is 17% higher that the similar average of the last five years, that has been US$ 8,3bn.

Foreign investment has not ceased in Chile, and “on the contrary is a good signal of economic activity dynamism and confirms the high interest of corporations to keep making business in Chile,” something that as agency we continue to corroborate, said Karla Flores from InvestChile, the agency which promotes overseas investments in the country.

However this has not impeded the US dollar to balloon to almost 1,000 Chilean Pesos in recent weeks, particularly because of some articles in the Constitution proposal, a new tax bill under the slogan “make those who have more, to pay the most”, prospects of a significant slowdown of the global economy and thus demand for copper, the Chilean main export item.

Headlines indicate that the Chilean Peso, once considered a strong reliable currency has become the Latin American the one that has lost most value against the US dollar, 13,7% in a month (with the exception of rudderless Argentine Peso, 18,7%). At the other end, the currency which has most strengthened vis-a-vis the greenback has been the Uruguayan Peso.