Fynsa
The news regarding the most important economic issue for Chileans does not stop. The INE reported that the CPI for March increased 1.1% with respect to February, the highest variation of the year, which was in line with our estimate and slightly above that of the market and surveys. Although the number could surprise more than one unwary person, we can tell you that March is characterized by high records (as well as September) since, for seasonal and methodological reasons, many price adjustments are made in this month.
It is for this reason, then, that it should come as no surprise that the education division was by far the one that increased the most, also representing the highest incidence, explaining more than 70% of the total increase. Another product that had a strong impact was rent, which, being the item that weighs the most in the basket, had an impact of almost 0.1 pp in the aggregate variation. The first increase does not concern us so much, since for methodological reasons (education is measured only once a year), this variation incorporates all the inflation seen during 2022, which would not be seen in the coming months. However, rent could have more repercussions, as its inertia would continue to prevent a faster inflation normalization.
On the downside, the transportation division once again leads the declines, especially due to the continuing adjustments in fuel prices and also in one of the markets that was the tightest during the pandemic: the automotive sector. In fact, in the last 6 months, new cars have fallen more than 7%, a figure similar to the variation shown by their used counterparts.
In any case, what is still worrying is what is happening with core inflation, which in our country is constructed by omitting from the index those goods and services that are more volatile. Thus, this indicator increased 1.6% during the month, which caused it to rise year-on-year from 10.7% to 10.8%. The reader may not find this too much, but keep in mind that the aggregate index has fallen systematically in recent months and, in particular, from 11.9% to 11% in March.
It is this more medium and long-term stagnation of inflation, then, which has motivated the Central Bank to mention that it would keep the rate at 11.25% for a longer period than previously forecast. In the Monetary Policy Report (MPR) published during the week, it mentioned just that, noting the additional difficulties that inflationary control was posing. All things considered, it is quite likely that we will not see movements in the TPM until at least the fourth quarter of 2023.
