Despite upside risk to core prices, Chile's inflation is set to moderate further

Recent inflation numbers suggest that Chile's headline inflation has started moderating but that core inflation has continued to move up. 

While February is likely to be the last month to see acceleration in core inflation, the probability of a sharp decline in the near term has subsided thanks in part to rising wages. 

Societe Generale notes as follows:

• We expect inflation to eventually converge on the BCCh's target in Q4. The sharp fall in oil prices should keep energy prices low, with some effect on the prices of other goods and services. 
  
  
• The bulk of the inflation acceleration over the past year was due to the peso depreciation, and its effect has probably peaked unless CLP depreciates further (from its current level of nearly CLP/USD 630). 
  
  
• Finally, wage growth should slow along with the expected rise in the unemployment rate.