May 8, 2020 / 12:40 PM / in 21 days

UPDATE 2-Chile says consumer prices steady in April, annual inflation 3.4%

(Updates with analyst comment)

SANTIAGO, May 8 (Reuters) - Chile consumer prices stayed steady in April, the government’s statistics agency said on Friday, as falling global fuel costs held down the price of transportation and airfare, while food and beverages crept upwards.

Annual inflation hit 3.4%, within the central bank’s 2% to 4% target range, the agency said.

Sputtering inflation and the potential for a “severe” economic contraction as a result of the coronavirus crisis prompted Chile´s central bank last month to lower its benchmark interest rate to 0.5%, the lowest level in a decade.

Santander said in a note that inflationary pressures had dropped off sharply as the novel coronavirus spread across Chile, adding that changes in consumer prices would likely remain small in the near-term.

“Inflation will continue to decline and will close the year in the lower part of the Central Bank range,” the bank said.

The coronavirus outbreak hit the South American nation in early March. Since then, Chile has reported more than 24,000 cases and 285 deaths. Much of the country´s economy has been shuttered, with large swaths of the population under quarantine.

Credicorp Capital said in an analyst note that the lockdowns had boosted the price of some essential goods, but was driving larger declines in non-essential goods.

“Lockdown measures together with an expected higher unemployment rate and ... low oil prices might continue pushing down transport and service prices in the next months,” Credicorp said.

Chile´s export-driven economy is among the most exposed in Latin America to faltering global demand for top commodities like copper, as well as many agricultural products. (Reporting by Dave Sherwood Editing by Chizu Nomiyama, Nick Zieminski and Jonathan Oatis)

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