Chilean inflation is poised to accelerate further in April, with economists projecting a monthly increase between 1.6 percent and 1.7 percent. This forecast follows a 1 percent jump in the Consumer Price Index (IPC) during March, a figure that has heightened concerns regarding the erosion of household purchasing power.
Alejandro Alarcón, an economist at the University of Chile’s Faculty of Economics and Business, said the March data only partially captured the recent volatility in fuel prices. He noted that the abrupt surge in gasoline and diesel costs over the last few weeks has yet to fully filter through the broader economy.
“I was not surprised by this 1%,” Alarcón said during an interview with CNN Chile. “The trajectory of inflation was already markedly upward, and projections for April will likely exceed 1%.”
The ripple effect of rising costs
Alarcón warned that the speed at which businesses pass rising costs onto consumers remains the primary driver of the current inflationary environment. As expenses for goods and services climb, the cumulative impact creates a persistent inflationary inertia that is difficult to curb.
“A series of goods and services in the economy are being affected, and that will continue to elevate the inflationary trajectory in the coming weeks,” he stated. He added that inflation functions as an implicit tax on the public, directly reducing the capacity of families to spend and discouraging long-term private investment.
While government initiatives like the MEPCO mechanism aim to dampen fuel price volatility, Alarcón cautioned that these tools have limitations. He argued that while they provide a sense of stability, they cannot replace the need to address the underlying dynamics of core inflation.
Regarding the ongoing national debate over tax reforms, Alarcón suggested that any strategy to stimulate growth must be paired with fiscal prudence. He emphasized that the government must foster an environment that encourages healthy, sustainable growth without fueling further price instability.
“The point is that the economy grows healthily and does not incubate more inflationary pressure,” he said. Despite the complexity of the current scenario, Alarcón urged policymakers to monitor the situation closely before making rapid adjustments to economic strategy.
