Upward revisions to Chile's inflation forecasts

Chile year-ahead inflation expectations have moved up in recent months although the longer term inflation trajectory remains closer toBCCh's target.

The substantial depreciation of Chilean peso has stopped inflation moderation this year and, in fact, inflation returned to 5% yoy (with core inflation remaining more stubborn). 

Given the pressure on the CLP and a stronger-than-expected labour market, it is unlikely that inflation will fall substantially despite growth weakness (prompting us to raise our inflation forecasts for 2015 and 2016 to 4.6% and 4.3% respectively), said Societe Generale.