The inflation in Chile dropped to its lowest level in eight months in October 2022, according to official data released on November 8, 2022. This encouraging development validates the central bank's belief that the need for aggressive monetary tightening has come to an end.
The information follows a signal from Chile's central bank in October 2022 that an increase in interest rates is unlikely and rates would remain at their current level for as long as necessary to ensure that inflation would reach the targeted level. Chile, the largest producer of copper in the world, implemented a vigorous round of monetary tightening, including a 50 basis-point increase in October 2022 to 11.25% to control inflation that followed recovery from the COVID-19 pandemic. The inflation rate in Chile increased to 10.8% in 2022 from 4.5% in 2021, according to GlobalData.
The cost of transportation and increasing prices of food and non-alcoholic beverages were the major factors that contributed to inflation in October 2022. Inflation is expected to continue to decline over the first half of 2023 as a result of tight monetary measures, but rates are anticipated to remain steady in the near future.
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