Fynsa
Although historically the MEPCO was not the ideal system, we learned to live with it given its effectiveness and the rationale behind it. If we do not allow it to operate, it is as if it did not exist at all, and decisions on fuel prices would be made entirely at the discretion of officials.
The CPI for December registered a monthly decline of -0.2%, falling below market expectations. With this, inflation closed 2025 at 3.5% annually, just above November's figure.
Inflation cannot be controlled with a magic wand; it is controlled by working every day to achieve this. Even when others do not cooperate.
The CPI rose 0.3% compared to the previous month, which was in line with our expectations, although slightly above market expectations. With this, the year-on-year variation remained at 3.4%, increasing expectations that the elusive 3.0% will soon be reached.
Custom dictated that, in September, a monthly increase in the CPI of 0.5% or 0.7% was normal, usually motivated by increases in the products most consumed by Chilean families during the holidays. However, for some time now we have seen a change in this behavior.
If the UF is banned, there is nothing to prevent contracts from being indexed based on the CPI variation of the previous month or readjusted a priori according to some estimate of future inflation plus a risk premium. How do we then ensure that families are not affected by the loss of purchasing power?
The June CPI showed a monthly decline of 0.4%, well below our and the market's estimates. Although the aggregate result seems significant, the underlying indicators soften the analysis somewhat.
The April CPI surprised by coming in below expectations, reinforcing the trend of inflation moderation. Convergence towards the target seems to be progressing, with no significant pressures on the near horizon.
It does not appear that the risks are being executed yet, or at least that is what the current basket data is showing (at least under our analysis).
With inflation more persistent than anticipated, UF-indexed strategies are the key to maximizing returns.
