Andeans

Research evidence excerpt

Diego W. Pereira (1-212) 834-4321

J.P. Morgan Securities LLC

Juan Goldin (57 601) 869 8746

BANCO J.P. MORGAN COLOMBIA S.A

Andeans

Chile: Beneath a benign CPI print, persistence

remains

Colombia: Food-led inflation relief, but services

remain sticky

Peru: A patient BCRP faces rising inflation expectations

Chile’s headline inflation printed slightly softer than we had

expected in July, with the forecast error basically explained

by food prices printing below the projection. The trailing 12

month rate thus declined to 3.53%, back within the upper

bound of the target range, while momentum dropped sharply.

That said, underlying inflation, captured by the central bank’s

ex‑volatiles measure, continues to show momentum edging

higher, pointing to persistence. This is most visible in core

services, the most persistent component and the one most

closely linked to domestic demand, labor market conditions,

and wages. A key factor behind this persistence, in our view,

is the growing disconnect between real wage dynamics and

labor market conditions: job creation has been subdued for

months and the unemployment rate continues to rise, yet real

wage growth has regained momentum, and households appear

to have weathered the energy shock better than we previously

assumed. We continue to expect the central bank to remain on

hold until hiking in 1Q27.

Colombia inflation also printed slightly below our below-consensus expectations. Both headline and core inflation eased

marginally on an annual basis, but remain well above the

upper bound of the target range. The downside surprise was

also fully explained by food deflation, while underlying inflation dynamics were broadly in line with our central scenario.

In short, underlying inflation, particularly services, continues

to look persistent, pointing to further near-term upside risks

and increasingly entrenched pressures. We continue to expect

inflation to remain above the target ceiling throughout next

year unless both fiscal and income policies become consistent

with the disinflation process. We are aligned with BanRep

Staff in highlighting that risks remain skewed to the upside,

…