Consumer prices increased 1.1% from December, above our 1.0% call (Bloomberg consensus; also implicit in the curve). The price pull was led by the 10.8% electricity price increase, condominium fees (reflecting indexation pressures), gasoline, interurban transportation, food prices (bread, meat) and the reversion of household maintenance and equipment items that were affected by sales events in December. Ex-volatile consumer prices rose 0.6% from December (in line with our call).
Sequentially, core inflation shows signs of easing. In annual terms, headline inflation rose from 4.5% to 4.9%. Annual inflation has been above the 3% target since early 2021. Core inflation dropped from 4.3% to a still elevated 4.2%. Core goods dropped 0.3pp to 3.1% YoY, while core services were stable at 5% (roughly the case since June last year). Volatiles rose 1.8% MoM, leading to an annual increase of 6.1%. Sequentially, the annualized headline inflation over the last quarter ticked down to 4.8%, while core pressures dipped to 3.8% from a 5.6% peak in the October ’24 quarter.
Our Take: Inflation pressures are elevated and risks tilt to the upside amid indexation pressures and feedback from business surveys that signal a preference to increase the rate of passthrough from the exchange rate to final prices. We expect short-term inflation estimates to continue to be revised to the upside and consolidate the view of a prolonged stay on hold period for the central bank. The level of persistence of the recent rally of the CLP may alleviate the rise of medium-term inflation expectations and cool market talk of possible rate hikes this year. Next week the central bank with publish both the analyst survey (Tuesday) and the trader survey (Friday). The January results of both surveys signaled rate cuts this year. The February CPI will be released on March 7, we preliminarily have a range of 0.4-0.5%. We have a 4% yearend call, with risks tilted to the upside.
