Chile inflation spikes 1.2% in September, its highest since 2008
RIO DE JANEIRO, BRAZIL – Inflation continues an upward spiral in Chile, soaring in September to 1.2%, its highest record since 2008 and well above market expectations, the National Statistics Institute (INE) reported Friday (8).
The Consumer Price Index (CPI) has increased by 4.4% year-to-date and 5.3% year-on-year, beyond the Central Bank’s tolerance range of between 2% and 4%.
“In the 9th month of the year, all categories that make up the CPI basket contributed positive incidences to the index’s monthly variation,” INE said in a statement.
Meats (9.2%), tomato (21.5%) and air transport (23.5%) were among the items that showed the highest increases, the agency said.
September typically posts high inflation records in Chile due to the celebration of the Independence Festivities, but the figure released this Friday far exceeds what market operators had forecast (0.8%).
Economic aid provided by the government to mitigate the impact of the pandemic, as well as the 3 early withdrawals of 10% of pension funds approved by Parliament also to face the crisis, are considerably boosting consumption.
The Chilean Central Bank, which forecasts that inflation will close 2021 at 5.7%, in August raised the benchmark interest rate from 0.75% to 1.5%, thus intensifying the withdrawal of monetary stimulus given the improvement of the economy and the inflationary risk.
Market operators on Thursday said it is very likely that the Central Bank will raise the benchmark interest rate again next week to contain the price rise, at a time when the Senate is discussing a 4th pension fund withdrawal.
The Chilean economy shrank by 5.8% in 2020 – the worst drop in 4 decades – and almost 2 million jobs were lost due to the pandemic, but the Central Bank estimates GDP growth for this year to be between 10.5% and 11.5%.
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