UPDATE: Chile's Bachelet: Government Acting To Ease Inflation Impact
Friday July 4th, 2008 / 21h28
(Adds comments from energy minister) SANTIAGO -(Dow Jones)- The Chilean government is already taking measures to ease the effects of inflation, which is currently nearing a double-digit pace, President Michelle Bachelet said Friday. "We haven't waited for inflation to reach current levels before taking measures," Bachelet told reporters after speaking at a seminar. She said earlier in the year, the government increased the minimum wage, gave the poorest families a $40 voucher for their electricity bills, and provided other vouchers for the elderly and the retired. "The government has been working seriously and responsibly, considering every factor that allows us to weather the inflationary process," Bachelet said. This week, the government statistics institute reported a 1.5% on-month increase in the consumer price index in June, which brought annualized inflation to 9.5%. The sharp increase was mostly the result of higher fuel prices, the institute said. The higher fuel prices prices have not only made transportation more expensive, but also hurt power-generation costs. Most generators in Chile have been running on diesel since Argentina cut off most of its natural gas exports to Chile. "In the trend inflation curve, one can see the cost of electricity has had a strong impact," Bachelet said. She said energy prices will likely retreat in the near-term, easing the impact on consumer prices. Energy Minister Marcelo Tokman told reporters that higher water reservoir levels, greater power supply expected to come online starting in 2008, and lower consumer demand could all help lower electricity prices. "While it's true that there are factors that point to a drop in prices...at the same time there are certain risk factors that could push costs higher," Tokman said. Among those risks are international crude oil setting record prices, he said. -By Carolina Pica, Dow Jones Newswires; 56-2-820-4244; carolina.pica@dowjones.com (Patricia San Juan contributed to this report) Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=N3pJNd1FyFKKQZIFIr7Pgg%3D%3D. You can use this link on the day this article is published and the following day.
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