Euro zone inflation unexpectedly ticks up amid record GDP slump By Reuters



© Reuters. A businessman walks on the esplanade of La Defense, in the financial and business district west of Paris

By Francesco Guarascio

BRUSSELS (Reuters) – The euro zone’s economy recorded its deepest contraction on record in the second quarter, preliminary estimates showed on Friday, while the bloc’s inflation unexpectedly ticked up in July.

In the months from April to June, gross domestic product in the 19-country currency bloc shrank by 12.1% from the previous quarter, the European Union’s statistics office Eurostat said in its flash estimates.

The deepest GDP fall since the time series started in 1995 coincided with coronavirus lockdowns which many euro zone countries began to ease only from May.

The contraction was slightly more pronounced than market expectations of a 12.0% fall, and followed the 3.6% GDP drop recorded in the first quarter of the year.

Among the countries for which data were available, Spain posted the worst output slump, with its economy shrinking by 18.5% quarter-on-quarter, worse than expected and wiping out all the post-financial crisis recovery of the last six years.

GDP in Italy and France also fell sharply but less than forecast, respectively by 12.4% and 13.8%. Germany, the largest economy in the bloc, saw a 10.1% contraction in the second quarter, worse than expectations of a 9.0% slump.

Inflation continued instead its upward trend, defying expectations of a slowdown, supporting the European Central Bank’s expectation that a negative headline reading may be avoided.

Eurostat said consumer prices in the bloc rose 0.4% on an annual basis in July from 0.3% in June and 0.1% in May. Economists polled by Reuters had forecast a 0.2% increase in July.

Underlying price pressure also accelerated. Excluding volatile food and energy prices, a key measure watched by the ECB, inflation rose by 1.3% from 1.1% in June, Eurostat’s flash estimates showed.

An even narrower gauge, which also excludes alcohol and tobacco, jumped to 1.2% from 0.8% in June.

The acceleration in headline inflation was driven by higher prices of industrial goods which rose by 1.7% after a 0.2% increase in June.

Food, alcohol and tobacco prices went up by 2.0% on the year, but slowed from the 3.2% rise recorded in June.

Energy prices fell by 8.3% in July, after plunging 9.3% in June.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Colombia GDP dived in second quarter, along with inflation: Reuters poll By Reuters



© Reuters.

By Nelson Bocanegra

BOGOTA (Reuters) – Colombia’s economy will have suffered the worst contraction in its history in the second quarter because of fall-out from a coronavirus quarantine, analysts said in Reuters poll on Thursday.

Meanwhile inflation will continue well below the long-term target rate of 3% amid low consumer consumption.

The Andean country’ gross domestic product will have contracted a median of 16% between April and June compared to the same period last year, predictions by 18 analysts showed.

Analyst contraction estimates were between 8% and 18.6%. The government statistics agency will publish second-quarter GDP figures on Aug. 14.

“Clearly it will be the worst registered in history, the worst-hit sectors are those which had the most closures, like retail, recreation, services provided directly to the public,” said Camilo Perez, head of economic studies at Banco de Bogota.

“But it’s clear the impact is generalized. It’s not just a brake on supply but on demand, and it’s a very complicated collision,” he added.

Colombia has been in a national lockdown since late March. Though some sectors and regions are gradually reopening, the quarantine is set to last until Aug. 30.

Analysts said the economy will contract 5.95% this year, more than the 5.5% projected by the government. Growth will reach 4.35% next year, those polled said.

Inflation estimates for this year were down drastically to 1.8%, from a 2.21% estimate in last month’s survey, because of low domestic consumption.

If inflation falls that precipitously, it would be the lowest price growth figure for 65 years.

“The figures confirm the deflationary effects of some of the measures adopted under the terms of the (government’s) economic emergency have been stronger than anticipated,” said analyst Julio Romero of Corficolombiana.

In July alone, consumer prices will fall 0.17%, taking the 12-month figure to 1.8%, analysts said.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

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Dollar squashed as Fed seen softening inflation stance By Reuters



© Reuters. Saudi riyal, yuan, Turkish lira, pound, U.S. dollar, euro and Jordanian dinar banknotes are seen in this illustration

By Tom Westbrook

SINGAPORE (Reuters) – The dollar crumbled on Monday as cracks in the U.S. economic recovery drove investors away from the world’s reserve currency as they increased bets the Federal Reserve could flag another accommodative shift in its outlook this week.

The greenback fell to a four-month low against the yen, a new 22-month trough on the euro and a five-year low against the Swiss franc, while gold minted a record high. [MKTS/GLOB]

The Fed meets Tuesday and Wednesday after labour data last week showed the U.S. employment recovery wobbling. No major announcements are anticipated but analysts expect policymakers may begin laying the groundwork for more action in September or the fourth quarter.

The U.S. central bank could firm recent hints about the benefits of an average inflation target, which would allow rates to stay lower for longer.

“I think we’re seeing the U.S. dollar adjusting to that,” said Chris Weston, head of research at Melbourne brokerage Pepperstone.

“If they are to ever get inflation…then the reaction is to allow the economy to run hot for a large period of time,” he said. “So the chance of the Fed raising in the next five years is being repriced in the U.S. dollar — there’s a momentum trade as people run this short position into the Fed meeting.”

The value of short dollar positions hit its highest in two years last week , while the futures market is pricing negative rates in the U.S. next August and no upward movement in the next three years .

The euro rose 0.5% to $1.1725 and the Antipodean currencies gained by the same margin, while sterling and the Singapore dollar both hit four-and-a-half month highs.

The pound was last at $1.2842, the sat at $0.7134 and the at $0.6675, a fraction below its highest since January.

PASS THE STIMULUS

Market sentiment is being clouded by concerns over the global recovery as coronavirus cases spike and geopolitical tensions worsen.

None of the majors made much headway on the yen and the yuan, a barometer of Sino-U.S. relations, struggled to capitalise on the dollar’s weakness. It stayed on the weaker side of 7-per-dollar at 7.0021 in offshore trade . [CNY/]

China said it had taken over the premises of the U.S. consulate in Chengdu on Monday after ordering the facility shut in retaliation for being ousted from its consulate in Houston.

Elsewhere, investors are also beginning to fret about U.S. political deadlock over the next round of fiscal stimulus with a month-end deadline looming to extend some unemployment benefits.

The White House and Senate Republicans agreed on a $1 trillion relief package, but that must be negotiated with Democrats who have been pushing for bigger spending.

Last week a recovery in the U.S. job market unexpectedly stalled, while purchasing manager surveys showed Europe’s recovery pulling ahead – adding to nerves about any letup in U.S. stimulus.

“Failure to pass additional fiscal measures or a minimalist bill will likely generate a significant shock to markets,” said Steve Englander, head of G10 FX research at Standard Chartered (OTC:) in New York.

“We expect a big stimulus package that probably will reflect Democratic priorities on income support and spending.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Canada annual inflation rate jumps by most in nine years as economy reopens By Reuters



© Reuters. FILE PHOTO: Phase 2 of the reopening from the coronavirus disease (COVID-19) restrictions in Toronto

OTTAWA (Reuters) – Canada’s annual inflation rate in June posted its biggest jump in more than nine years as restrictions imposed to curb the coronavirus outbreak were lifted, Statistics Canada said on Wednesday.

The rate jumped to 0.7% from a 0.4% decline in May. Analysts polled by Reuters had expected the annual rate to increase to 0.3% in May. The 1.1 percentage point matches the increase seen between February and March 2011.

The main drivers of growth were recovering prices for energy, food, as well as goods such as passenger vehicles, clothing and footwear, Statscan said.

Gasoline prices declined by 15.7% compared to a 29.8% plunge in May “mainly as a result of higher demand coinciding with the gradual reopening of businesses and public services, as well as a general increase in local travel in June”, it added.

Meat prices rose 8.1% from June 2019. Overall, prices rose in nine of the 10 provinces.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Euro zone inflation confirmed at 0.3% year/year in June By Reuters


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© Reuters. FILE PHOTO: Outbreak of the coronavirus disease (COVID-19) near Bonn

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BRUSSELS (Reuters) – Euro zone consumer prices rose slightly in June, while core measures of inflation which exclude volatile components eased, the European Union statistics office Eurostat said on Friday, confirming its earlier estimates.

Eurostat said annual inflation in the 19 countries sharing the euro rose by 0.3% in June after a rise of just 0.1% in May, in line with the agency’s earlier estimates released on June 30.

Despite the uptick, inflation is still far below the European Central Bank’s target of below but close to 2% over the medium term.

Food, alcohol and tobacco prices went up in annual terms by 3.2%, while prices in the services sector, the largest in the bloc’s economy, rose by 1.2% in June. These increases offset a 9.3% fall in energy prices.

Excluding energy and unprocessed food prices – a measure the ECB calls core inflation and watches closely in policy decisions – prices grew 1.1% in annual terms, easing from 1.2% in May, Eurostat figures showed.

An even narrower core inflation measure, stripping out also alcohol and tobacco prices that many market economists look at, dipped to 0.8% year-on-year from 0.9% in May.

Both measures of core inflation confirmed Eurostat’s earlier estimates.

Month-on-month, euro zone inflation also rose 0.3% in June.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



U.S. producer prices unexpectedly fall; underlying inflation stabilizing By Reuters



© Reuters. Workers prepare free food for distribution at the Chelsea Collaborative in Chelsea

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. producer prices unexpectedly fell in June as rising costs for energy goods were offset by weakness in services, pointing to subdued inflation that should allow the Federal Reserve to keep pumping money into the economy to arrest a downward spiral.

Still, deflation remains unlikely as the economy battles depressed demand caused by the COVID-19 pandemic. The report from the Labor Department on Friday also showed underlying producer inflation ticked up last month.

Deflation, a decline in the general price level, is harmful during a recession as consumers and businesses may delay purchases in anticipation of lower prices. The economy slipped into recession in February. The Fed is injecting money into the economy through extraordinary measures while the government has provided nearly $3 trillion in fiscal stimulus.

“The message for Fed officials, if they needed convincing at all, is that the worst economy since the Great Depression is keeping inflationary pressures on the back burner for now and that interest rates will need to remain at very low levels for the next few years at a minimum,” said Chris Rupkey, chief economist at MUFG in New York.

The producer price index for final demand dropped 0.2% last month after rebounding 0.4% in May. In the 12 months through June, the PPI declined 0.8%, matching May’s decrease.

Economists polled by Reuters had forecast the PPI would climb 0.4% in June and fall 0.2% on a year-on-year basis.

Excluding the volatile food, energy and trade services components, producer prices rose 0.3% in June. That was the biggest gain in the so-called core PPI since January and followed a 0.1% rise in May. In the 12 months through June, the core PPI edged down 0.1%. The core PPI dropped 0.4% on a year-on-year basis in May, which was the largest annual decrease since the introduction of the series in August 2013.

The Fed tracks the core personal consumption expenditures (PCE) price index for its 2% inflation target. The core PCE price index increased 1.0% on a year-on-year basis in May, the smallest advance since December 2010. June’s core PCE price index data will be released at the end of this month.

Stocks on Wall Street were trading higher. The dollar () fell against a basket of currencies. U.S. Treasury prices rose.

SUPPLY DISRUPTIONS

With a record 33 million people on unemployment benefits, inflation is likely to remain soft. Though businesses have reopened after shuttering in mid-March to slow the spread of COVID-19, new cases of the respiratory illness have surged in large parts of the country, causing uncertainty and curtailing domestic demand. Overseas demand has also tanked.

Gross domestic product is expected to have declined in the second quarter at its steepest pace since the Great Depression.

“COVID caused global demand to collapse, which is ultimately deflationary, but it also caused all kinds of supply disruptions, which are momentarily inflationary,” said Chris Low, chief economist at FHN Financial in New York. “The result is generally falling prices amidst a great deal more price volatility than has become the norm in the past decade. Both were on display in this morning’s PPI”.

In June, wholesale food prices decreased 5.2% after surging 6.0% in May. Wholesale energy prices shot up 7.7% in June after rebounding 4.5% in the prior month. Gasoline prices rose 26.3% after accelerating 43.9% in May. Goods prices gained 0.2% last month after jumping 1.6% in May.

Excluding food and energy, goods prices inched up 0.1% last month after being unchanged in May.

The cost of services dropped 0.3% in June after falling 0.2% in the prior month. Services were weighed down by a 1.8% plunge in margins for final demand trade services, which measure changes in margins received by wholesalers and retailers.

A 7.3% drop in margins for machinery and vehicle wholesaling accounted for 80% of the decline in services last month. There were also decreases in the prices for apparel, jewelry, footwear and accessories.

But prices for hospital inpatient care jumped 0.8% after rising 0.4% in May. The cost of healthcare services gained 0.2%after increasing 0.5% in May. Portfolio management fees advanced 2.2%. That followed a 3.9% rebound in May. Those healthcare and portfolio management costs feed into the core PCE price index.



Anaemic euro zone inflation unexpectedly ticks up By Reuters



© Reuters. FILE PHOTO: Outbreak of the coronavirus disease (COVID-19) near Bonn

BRUSSELS/FRANKFURT (Reuters) – Euro zone inflation unexpectedly rose in June but underlying price pressures dropped again, underscoring fears that consumer price growth will remain anaemic for years as the bloc recovers from the biggest recession in living memory.

Annual inflation in the 19 countries sharing the euro accelerated to 0.3% in June from a four-year low of 0.1% in May, beating forecasts for no change and supporting the European Central Bank’s expectation that a negative reading may be avoided.

Excluding volatile food and energy prices, a key measure watched by the ECB, inflation eased to 1.1% from 1.2% while an even narrower gauge, which also excludes alcohol and tobacco, fell to 0.8% from 0.9%, data from Eurostat, the EU’s statistics agency showed on Tuesday.

The ECB targets inflation at 2% but has already missed this for seven years and expects to undershoot at least through 2022 as a coronavirus-induced recession raises unemployment, dampens consumption and depresses wage growth.

Tuesday’s figure may still offer mild comfort to the ECB that the rapid decline in inflation, also fuelled by crashing oil prices, may be over, even if any rebound in price growth is still unlikely until next year.

Policymakers had hoped massive government wage subsidies which limited income losses for households plus super easy monetary policy would limit the damage to the economy and prop up confidence enough to prevent a dangerous deflationary spiral.

But ECB projections suggest inflation could stay at or near zero for the rest of 2020 and only pick up in the second quarter of 2021.

Energy prices were down 9.4% year on year in June, following an 11.9% plunge in May, while unprocessed food prices were 5.9% higher after a 6.7% increase in May. Inflation in services dropped to 1.2% from 1.3%.

For details of Eurostat data click on:

http://ec.europa.eu/eurostat/news/news-releases

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Inflation dog may finally bark, investors bet By Reuters



© Reuters. FILE PHOTO: NYSE-AMEX Options floor traders from TradeMas Inc. work in an off-site trading office due to the outbreak of the coronavirus disease (COVID-19), in New York

By Yoruk Bahceli

LONDON (Reuters) – Gold, forests, property stocks, inflation-linked bonds – these are just some of the assets investors are pouring money into on the view that the recent explosion of government spending and central bank stimulus may finally rouse inflation from its decade-long slumber.

With the world economy forecast to shrink 6% this year, it may seem like a strange time to fret about inflation.

And sure enough, market-based gauges suggest an uptrend in prices may not trouble investors for years. U.S. and euro zone inflation gauges indicate that annual price growth will be running at barely over 1% even a decade from now. .

So if inflation really is, as the IMF put it in 2013, “the dog that didn’t bark”, failing to respond to all the central bank money-printing unleashed in the wake of the 2008-9 crisis, why should investors prepare for it now, especially as demographics and technology are also conspiring to tamp down inflation across the developed world?

The answer is that some think the dog really will bark this time, partly because – unlike in the post-2008 years – governments around the world have also been rolling out massive spending packages, in a bid to limit the impact of the coronavirus pandemic.

“We will be pushing, pushing, pushing on the string and dropping our guard, then 3-5 years from now…that’s when the (inflation) dog will start barking,” said PineBridge Investments’ head of multi-asset Mike Kelly, who has been buying gold on that view.

“Gold worries about such things long in advance. It has risen through this coronavirus with that down-the-road-risk top of mind,” he added.

Even typically frugal governments such as Germany have joined central banks with trillions of dollars in stimulus programmes. Investors say even the long taboo topic of debt monetisation, where central banks directly fund government spending, may be on the cards.

“What worries me is that at the moment it seems that there is no limit to fiscal stimulus,” said Klaus Kaldemorgen, a portfolio manager at asset manager DWS, who said he was investing in inflation hedges far more now than he was after 2008.

Inflation hawks also cite a trend of de-globalisation, where shrinking international trade and Western companies bringing production back to their own countries leads to higher prices.

This view that inflation could pick up ahead is reflected in forward swaps and in Citi’s inflation surprise indexes, which show that the extent that U.S. inflation readings are surprising against market expectations has been at a record high and has ticked higher in the euro zone, too.

(GRAPHIC: Citi inflation surprise indexes – https://fingfx.thomsonreuters.com/gfx/mkt/qmypmodylpr/citi.PNG)

WHAT TO BUY?

Investors have an interest in pricing future inflation correctly to safeguard their returns, hence the need for hedges, assets that increase in value or at least hold it when price growth accelerates.

They appear primarily to favor U.S. inflation-linked bonds and gold. Wealth managers canvassed by Reuters have been channelling up to 10% of clients’ portfolios into the yellow metal via index funds, gold shares and even bullion.

But if gold prices have risen 18% since the end of March , some other hedges remain cheap.

U.S. 10-year inflation-linked bonds – known as TIPS – show “break-evens”, or the anticipated rate of inflation in a decade, around just 1.2%.

Also known as linkers, the face value and interest payments on these securities rise with inflation.

But despite the stimulus boom, “the inflation levels that are priced in are much lower than what was priced in at the end of last year,” said Teun Draaisma, a portfolio manager at Man Group, who has invested in inflation-linked assets.

(GRAPHIC: US TIPS breakeven rates – https://fingfx.thomsonreuters.com/gfx/mkt/ygdpzwrnovw/linkers.PNG)

So inflation might be some years away, but banks are advising clients to pick up cheap hedges. Morgan Stanley (NYSE:) suggests U.S. 30-year linkers, while Natwest advises buying 30-year UK linkers and 10-year euro zone inflation swaps.

“These hedges in many cases look extraordinarily cheap, so why not buy them now? We could wait, then things could start to move away from us,” said Colin Harte, multi-asset portfolio manager at BNP Paribas (OTC:) Asset Management.

Indeed, the S&P 10-year U.S. TIPS Index is already up 12% from March levels <.spbdu1st>.

“It won’t be a couple of years from now until (inflationary factors) start to come through, so that’s why we keep (long-dated U.S. linkers),” said Chris Jeffery at Legal & General’s asset allocation team.

Harte at BNP said his main hedge is gold but he has also invested in a broader commodity basket which includes , and oil.

WOOD AND FORESTS

And it’s not just about gold or linkers: another choice is real estate. Kaldemorgen of DWS is buying German residential property stocks, betting that the supply of new property will rise slower than the money supply.

Global house prices, adjusted for inflation, rose 14% in 2009-2019, according to the IMF.

Legal & General’s Jeffery accelerated investments in agricultural land and forestry earlier this year in expectation they will retain their real value over the five- to 10-year horizon. His holdings are via publicly listed shares of companies heavily exposed to such land.

Timber prices rose over 130% in real terms in Great Britain over the past decade, Forest Research data shows, while the value of U.S. farmland rose 28% in the decade to 2019, according to the Department of Agriculture.

Kelly of PineBridge also favours timberland, purchased through private funds. While predicting that linkers will remain cheap for the next few years, he expects timber to benefit sooner if rock-bottom mortgages entice more first-time home buyers and fuel a construction boom.



UK public inflation expectations slump due to COVID, BoE says By Reuters




LONDON (Reuters) – The British public’s long-term expectations for inflation slumped to a record low in May as the coronavirus hit the economy, a quarterly Bank of England survey showed on Friday.

The BoE said the public’s average estimate for inflation in five years’ time fell to 2.6% in May from 3.4% in February, the lowest since the survey began in 2009.

Expectations for inflation in two years’ time tumbled to 1.9% from 2.9%, matching a record low set in February 2009, while inflation expectations for the year ahead edged down to 2.9% from 3.0%.

The BoE looks at public inflation expectations as a guide to the likely future inflation pressure from wage demands and businesses’ price-setting decisions.

The BoE is expected to announce a fresh increase of at least 100 billion pounds in its bond-buying firepower next week.

The data comes from an online survey of nearly 2,500 people conducted May 12-17, rather than the usual face-to-face interviews, which the BoE said could have affected survey results.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Chile inflation lags in May as lockdown measures drag on prices By Reuters




SANTIAGO (Reuters) – Chilean consumer prices fell 0.1% in May, the government’s statistics agency INE said on Friday, as costs of many goods and services stagnated amid the growing coronavirus outbreak in the South American nation.

The price of transportation, hotels and restaurants all dropped, as did such staples as chicken and beer. The price of food and non-alcoholic beverages overall stayed steady versus the previous year, the agency said.

The numbers snuffed out early concerns that price gouging would dominate markets as panic over the pandemic and potential shortages set in, Finance Minister Ignacio Briones said.

“This is good news for families, because what interests us … is that they hope they can maintain their purchasing power,” Briones in a video statement.

Annual inflation hit 2.8%, tending towards the low end of the central bank´s 2% to 4% target range as prices have sagged.

Santander (MC:) said in an analyst´s note the numbers reflected low inflationary pressure overall in Chile, the result of bargain fuel prices and plummeting demand in the tourism and service sectors.

“Going forward, we project that the monthly price increases will be limited…and the annual variation…could close the year again close to 2%,” the bank said.

Chile, long hailed as one of Latin America´s most stable economies, is now in the throes of the pandemic, reporting nearly more than 120,000 total coronavirus cases and nearly 1,500 deaths. The crisis has devastated the economy of the world’s top producer.

Economic activity plunged 14.1% in April from the same month a year ago, the central bank said on Monday, the steepest drop in at least 34 years.

Economists widely predict double-digit unemployment and a sharp drop in gross domestic product by year´s end.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.