Chile posts steepest monthly price drop since 2023 ahead of rate decision

(Reuters) -Chile's consumer prices posted in June their first monthly drop this year and the steepest since late 2023, data from statistics agency INE showed on Tuesday, fueling expectations that the central bank may resume monetary easing later this month.

Prices in the world's largest copper producer fell 0.4% in June from the previous month, a sharper drop than the 0.12% decline expected by economists in a Reuters poll.

Six of the 13 sectors surveyed recorded price decreases in the month. "The price drops in the food and non-alcoholic beverages group, as well as in the apparel and footwear division, were notable," INE said in a statement.

Annual inflation in the South American country hit 4.1%, INE added, slowing from the 4.4% registered in the previous month and closing in on the Chilean central bank's target range of 2% to 4%.

The data "supports our view that policymakers will resume its easing cycle with a 25-basis-point cut, to 4.75%, later this month," Capital Economics' emerging markets economist Kimberley Sperrfechter said in a note to clients.

Chile's central bank last month kept its benchmark interest rate unchanged at 5% for a fourth consecutive meeting given above-target inflation and global uncertainties, but later said that a 25-basis-point cut had been considered.

(Reporting by Aida Pelaez-Fernandez; Editing by Gabriel Araujo)

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