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Thursday, July 31, 2008

Chile Industrial Output Falls Again In June

Chilean industrial output shrank 0.9 percent in June over June 2007. This was the second consecutive decline. The industrial production index has now fallen year-on-year in three of the past four months, according to National Statistics Institute data. Unemployment was also higher than expected at 8.4 percent, the institute said today in Santiago.

Metal production fell as output of molybdenum, which is used to strengthen steel, declined 28 percent. The Chilean peso fell 0.51 percent to 510.22 pesos per dollar as of 10.37 a.m. in New York on expectation the data may slow the pace of interest- rate increases.

The central bank raised its overnight lending rate by half a percentage point at each of its last two monthly meetings. The bank is committed to slowing inflation to 3 percent within two years from the 9.5 percent annual pace it reached in June, and will probably need to raise rates again, according to Vice-President Jorge Desormeaux.

Consumer spending fell 2.3 percent in real terms from a month earlier, the third month in a row that sales of consumer goods have declined or remained unchanged. Supermarket sales, which increased 14 percent year-on-year as inflation pushed up the prices of food, rose just 1 percent in real terms.

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