UPDATE 1-Chile bank rate hike less likely after inflation surprise

jueves 8 de octubre de 2015 08:58 GYT
 

(Recasts, adds details, comment, peso reaction)

SANTIAGO Oct 8 (Reuters) - Inflation in Chile rose less than forecast in September, putting pressure on the peso as expectations cooled for an imminent interest rate hike in the top copper producer.

The country's consumer price index rose 0.5 percent in September month on month, the government's statistics agency said on Thursday, below a Reuters forecast for a 0.7 percent increase.

As expected, the rise was driven by September's national holidays and weather conditions that pushed up the cost of food and transport, but lower gas prices helped keep a lid on it.

On an annual basis, inflation was 4.6 percent. It has hovered above the central bank's 2 percent to 4 percent target range for some 18 months.

The stubbornly high inflation, driven in part by a sharply weaker peso, has become the central bank's main concern, and it has indicated it is likely to raise the benchmark interest rate before the end of 2015.

However, it also has to consider anemic growth in its decision, and has kept the rate on hold at 3.0 percent for the last year.

The weaker-than-expected inflation reading may encourage the bank to not raise rates when it next meets on Oct. 15, analysts said.

"The inflation data and recent economic indicators give good reason for the central bank to abstain from a rate change (next week)," said Scotiabank economist Benjamin Sierra, adding that inflation appeared to have passed its peak.

Falling expectations of a rate hike, alongside a weaker copper price, led the peso to fall some 0.6 percent against the dollar on Thursday.

Core inflation was 0.4 percent for the month. (Reporting by Rosalba O'Brien and Antonio de la Jara; Editing by W Simon and JS Benkoe)