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Imports weakness compensated the contraction of exports during the month.
2023/12/07 | Andrés Pérez M., Vittorio Peretti & Ignacio Martinez Labra

Consumer prices increased 0.7% from October to November (1.0% one year earlier), well above market expectations and slowing the pace of the disinflation process. The monthly rise exceeded both the Bloomberg market consensus and our call of 0.2%, while also above the 0.1% from asset prices. The bulk of the surprise to us came from a greater payback for items affected by promotional sales in October (apparel, furniture, electronics), higher food price pressures and a large 18.3% MoM air fare increase. Upside pressures in the month stemmed from volatile prices, particularly goods, as core inflation (excluding volatiles) rose by a milder 0.5% from October, while core services increased 0.3%. In annual terms, total inflation fell 20bps to 4.8%, and core inflation declined to 6.0% (from 6.5%). Accumulated headline inflation as of November reached 4.5%. While activity data at the margin has exceeded expectations, the economy remains weak and domestic demand pressures are contained, supporting the view that less contractionary monetary policy is needed. The less favorable November CPI print may bolster views to persist with the 50bp rate cut pace. However, the loosening of global financial conditions and the appreciation of the CLP since the October meeting, along with inflation expectations that are anchored or slightly below the target means a larger cut cannot be ruled out given the highly contractionary level of the one-year ex-ante real rate (5.4%). 


Core inflationary pressures rose at the margin, but remain near the target. While tradable prices have picked up momentum at the margin over the last three months (partly linked to the CLP weakening post July), the high base of comparison saw annual tradable prices drop 0.5pp to 3.8%, as the food price pull eased (-0.7pp to 7.3%) and the correction in energy price drag grew (-0.8pp to -1.1%). On the other hand, non-tradable inflation rose 0.2pp to 6.1%, with services up 0.6pp to 6.1% YoY. Nevertheless, excluding volatile items, core services ticked down 10bps to 7.5%. At the margin, inflation accumulated in the quarter rose sharply to 6.2% (SA, annualized; 3.6% in 3Q), while core inflation rose from 2.8% in 3Q to 3.3% (SA, annualized; 5.6% in 2Q23). 


The November print will likely result in a slower inflation convergence path than we had anticipated (4.1% yearend), but not too dissimilar from the BCCh’s call of 4.3%. Expectations that inflation ends 2024 near the 3% target remain. While there is uncertainty as to whether an electricity price adjustment will materialize in December, the expectation of some payback from volatile items, along with initial signs of softer food price pressures and lower gasoline prices lead us to expect a December CPI range of -0.2 to 0%, for now.