The Consumer Price Index (CPI) rose 0.3% in December, a variation that was within market expectations, however it confirmed that Chile closed 2022 with annual inflation of 12.8% – the highest since 1991. Despite the trend, the Minister of Finance, Mario Marcel, said that inflation should decrease in the course of 2023 and return to levels of the order of 3% for 2024.
“The projections for 2023 that we share are to end this year with inflation of the order of 4% and 5%. And already in the second quarter we should have single-digit inflation, instead of the double digits we’ve had so far, in 12 months.” Therefore, “in the first half of 2024 we should be back at 3%,” said the head of the fiscal wallet, in conversation with TVN.
Minister Marcel said that “we have to be clear that this increase in inflation was very fast, it began to rise in June and July 2021, but it escalated rapidly in the course of 2022 due to the accumulation of upward pressures.” On the one hand, he said, there was demand and consumption growing very strongly, with an overheated economy. But, on the other hand, he added, we also had the increase in the prices of raw materials and especially of food and fuels as a result of Russia’s invasion of Ukraine. To this was added a very important increase in the dollar.
“All these factors contributed to pushing inflation upwards,” said the head of the Treasury, along with ensuring that “what we are now seeing is that these factors are moving in the opposite direction.”
“Consumption has been falling for several months and, on the other hand, commodity prices, several of them, are back to where they were a year ago. In addition, the exchange rate is also more or less where it was before the war in Ukraine,” he added.
Mario Marcel said that all this will contribute to lowering inflation. “A good example is that we have already had several weeks in a row of declines in fuel prices and it will continue to happen. We calculate that February measures will have accumulated a drop of 100 pesos in the liter of 93 octane benzine,” he added.
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