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Annual inflation is moving away from the Central Bank’s goal and part of the market sees a more limited cut in the interest rate

Inflation in April once again moved away from the Central Bank’s 3% goal. According to the National Institute of Statistics (INE) in the fourth month of the year, the Consumer Price Index (CPI) registered a variation of 0.5%, placing it at the high end of economists’ expectations.

With that, prices accumulate 2.2% in the year – more than half of what the issuing institute expects for 2024 as a whole – and went from 3.7% to 4.0% in twelve months, with respect to the spliced ​​series of the index and 3.2% to 3.5% in the reference series, which is what the Central Bank looks at when managing its monetary policy.

As detailed by the INE, in the fourth month of the year, eight of the 13 divisions that make up the CPI basket contributed positive impacts on the monthly variation of the index, three presented negative impacts and two registered zero incidence.

Among the divisions with increases in their prices, food and non-alcoholic beverages (0.7%) stood out with 0.154 percentage points (pp.), transportation (1.1%) with 0.148pp and Housing and basic services with an increase of 0 .7 and an incidence of 0.116 pp.


The remaining divisions that had a positive influence contributed together with 0.298pp. Of the divisions that recorded monthly decreases in their prices, clothing and footwear stood out (-1.9%), with an incidence of -0.052pp.

At the product level, the gas It was the one that had the highest incidence with 0.116pp and a variation of 3.4% and accumulated an increase of 5.2% to the fourth month of the year. The second product that had the most impact was new car with an increase of 1.6% and an incidence of 0.055pp. So far this year it has registered an increase of 2.8%.

Bread It was placed in third place with an incidence of 0.048pp with an increase of 2.2% in the month and 4% between January and April. Leasing recorded an increase of 0.5% in April and 3.3% so far this year with an incidence of 0.040pp.

As a consequence of this rise in the CPI, The Development Unit (UF) will rise $186.5 in one month. In this way, the UF will reach $37,493.16. So far this year it will have risen $703.80 and $1,428.92 in 12 months.

From the government, the Minister of Finance, Mario Marcel, came out to comment on the figure: “This increase is largely influenced by the price of fuel. What we are going to have is that fuel price increases are going to slow down due to the fall in the exchange rate. The fall in the exchange rate will take pressure off inflation for the coming months. It would not surprise me that as long as we continue to have exchange rate behavior like the one we are seeing, we could close the year below what the Central Bank originally projected of 3.8%,” said the Secretary of State on Radio Infinite.

In this context, he announced that the price of gasoline and paraffin will register drops in the coming weeks.


Given this scenario, a scenario is being consolidated in which inflation will still remain far from the Central Bank’s goal of 3%. By the end of the year, the issuing institute projects that inflation will be 3.8%. However, market expectations would now see that number as the “floor” of what could happen. In fact, estimates point to between 3.8% and 4.2%.

At Coopeuch, they expect that in May the monthly variation of the CPI will be between 0.3% and 0.4%, where again the gasoline item would contribute the greatest positive impact. For December 2024, meanwhile, they maintain an annual variation of the CPI around 3.8%.

In Santander they state that “although in the coming months we will continue to observe an increase in inflation, this would be temporary, the product of greater exchange rate transfers than those observed so far and international prices that continue to show high volatility.” They argue that “this process would continue until the end of the third quarter, when we would begin to observe a reduction in inflation, to close the year around 3.8%.”

In addition, Víctor Martínez, executive director of the Business and Society Research Center of the Universidad del Desarrollo, predicts that “the annual variation of the CPI will reach 3.8% by December 2024, within the estimates of the Central Bank.”

At Tanner they maintain that “inflationary risks remain present and focused mainly in the international context, related to geopolitical tensions, fuel prices, transportation costs and maintenance of monetary policy in the United States. Internally, the impact of the depreciation of the peso remains present, although with less force.” For all these reasons, they raised their projection for inflation to a range between 3.8% – 4.0% for December 2024.

Sebastián Piña, economic analyst at BTG Pactual Chile, has the same position, who expects that “inflation will be in the range of 3.8-4% at the end of the year.”

At the top of the projections is Jorge Hermann, from Hermann Consultores, who expects inflation of 4.2% annually by December 2024. “The dollar is still high compared to the end of last year, the energy component hit hard in the recent months and some components of the services index look more inflationary going forward,” he emphasizes.

Another of the changes that this CPI is generating is that economists have now begun to introduce as an alternative the possibility that the Central Bank will cut its interest rate by only 25 basis points at the next meeting on May 22 and 23, although the consensus remains at 50 basis points. Currently, the Monetary Policy Rate (MPR) stands at 6.5%.

In Investments Security maintains that “the fact that inflation remains at the ceiling of the target range together with the postponement of rate cuts by the Fed, would lead the Central Bank to moderate the magnitude of the cuts between 25 to 50 basis points, although “We continue to believe that he will lean toward the latter option.”

Jorge Hermann, economist at Hermann Consultores points out that the MPR cut will be “0.25%, because inflation has accumulated 2.2% in 4 months and the projection at the end of the year has been growing month by month in 2024.”

In Santander they affirm that despite this “slight upward surprise, we do not see a change in the conduct of monetary policy, so there is room for cuts of 50 bp in the MPR at the May meeting.” Tanner and BTG Pactual have the same position with a drop of 50bp.

At Scotiabank they maintain that the April record “It would not have been a surprise for the Central Bank’s base scenario, so a 50 bp cut in the MPR would not be in question for the May 23 meeting.” Same vision delivers Victor Martínez, who expects a cut of 50 basis points.

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