Sources: Central Bank of Chile, Bloomberg, FAO and National Statistics Institute (INE). Figure 13 Relative prices of foodstuffs  Gasoline price in pesos  (index, January 2007=100)  (weekly index, 01/01/2007 and 06/07/2010=100)  135  135  120  120  130  130  115  115  125  125  120  120  110  110  115  115  105  105  110  110  100  100  105  105  100  100  95  95  95  95  04  05  06  07  08  09  10  11  90  CPIX1 foodstuffs/CPIX1 CPIX1 foodstuffs/CPI CPIX1 foodstuffs/CPIX1 w/o foodstuffs  t  t+16  t+32  2007  t+48  90 t+64  2010  Sources: Central Bank of Chile, ENAP and National Statistics Institute (INE). BIS central bankers’ speeches  13  Figure 14 Marginal cost of electric generation (*) (dollars per MWh) 350  350  300  300  250  250  200  200  150  150  100  100  50  50  0  0  04  05  06  07  08  09  10  11  (*) Alto Jahuel subsystem. Source: Center for the Economic Charge Delivery (CEDEC) of the Central Interconnected System.
On the other hand, it is also possible that the different paces of recovery between emerging and developed economies and the exchange rate tensions in place result in a delay in the withdrawal of the monetary stimulus, causing an immediate increase in global inflation and calling for more aggressive monetary policy responses later on. Conclusions Today monetary policy conduct is facing an important challenge. Headline inflation is near the target and trend inflation is back to above-zero figures, albeit still substantially below 3 percent. However, inflationary pressures have increased globally raising inflation forecasts, spreading concerns about future inflation in the different economies, including our own. The recovery process of the Chilean economy has consolidated and output gaps are closed. As I said a while ago, the increases we have seen in international prices of foodstuffs and oil will result in total inflation surpassing the upper bound of the tolerance range during some quarters. Our main task today is to ensure that the convergence of trend inflation to the target occurs with as few setbacks as possible. Monetary policy conduct will aim at the inflationary trend remaining in levels consistent with the tolerance range, so that towards the end of the projection horizon headline inflation stands around 3 percent. There are important risks, though. The recent experience with international price shocks has shown that preoccupation per se will not solve their inflationary consequences.