Chile reports the lowest yearly inflation in 24 months at 5.3% in August. The National Institute of Statistics (INE) provided this data.
This is the lowest rate in two years. Yet, it doesn’t meet the Central Bank’s 2-4% increase target.
August’s inflation fell 1.2 points from the previous month. Local media say this is a two-year low.
Until April, the nation saw price hikes above 10% for 12 months. Positive changes appeared in seven of the 12 CPI sectors in August.
Food and non-alcoholic drinks rose by 0.3%. Housing and basic services increased by 0.4%.
Other goods and services fell by 0.8%.
Last year ended with the highest inflation in 30 years. It reached an overall 12.8%, not seen since 1991.
Context
This dip in inflation is a positive sign for Chile’s economy. For months, inflation had burdened consumers and policymakers alike.
High inflation usually strains household budgets. It also puts pressure on the Central Bank to hike interest rates.
Yet, the Central Bank aims for a 2-4% inflation rate. Falling short of this target suggests ongoing economic challenges.
Persistent inflation often leads to reduced consumer spending. This in turn can slow economic growth.
Last year’s high inflation rate was an anomaly, not seen in decades. It had wide-reaching impacts, from food prices to rent costs.
But this new data suggests a cooling trend. If it continues, Chile might approach its target range soon.
However, some sectors still show increased costs. For instance, food and housing costs rose. These are vital needs, so their increase is concerning.
The decline in other goods and services offsets this a bit. The situation is a mixed bag, requiring careful monitoring in the coming months.