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(Bloomberg) — Chile’s consumer prices in April posted the biggest monthly jump since 2022, reflecting the brunt of of President José Antonio Kast’s decision to let fuel costs surge after the onset of the Middle East war.
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Consumer prices soared 1.3% from March, less than the 1.5% median forecast from analysts in a Bloomberg survey. It was the biggest monthly increase since July 2022. Annual inflation accelerated to 4%, above the 3% target, the national statistics agency reported Friday.
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Chile implemented its largest fuel price hike since at least 1980 in late March as the conflict in the Middle East drove crude higher globally and the new government said it didn’t have money for subsidies. The decision caused short-term inflation forecasts to spike and even prompted market speculation of interest rate rises. Still, central bankers said this week that their strategy of holding borrowing costs at 4.5% for a prolonged period remains in place.
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Energy costs surged by 11.4% on the month in April, according to the national statistics agency. Transportation prices jumped 8% while housing and utilities rose 0.8%. On the other hand clothing declined by 1.8% during the period.
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Chile central bankers expect inflation to ease back to their target next year, according to estimates published in late March.
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Policymakers’ strategy should be “revisited meeting-by-meeting” as new information comes to light, central bankers wrote in the minutes to their April rate decision published on Thursday. Board members added that they will pay special attention to any sign of greater inflation persistence.
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Chileans are more concerned about inflation than both security and migration for the first time since at least 2024, according to LatAm Pulse, a survey conducted by AtlasIntel for Bloomberg News and published on April 30. Nearly 43% of respondents said high prices are one of the nation’s main problems, up from 15% in February just before Kast’s inauguration.
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Economists surveyed by the central bank in April expect annual inflation to end this year at 4.3% before easing back to 3% in December 2027.
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—With assistance from Giovanna Serafim and Robert Jameson.
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