Chile’s president seeks to curb inflation

RIO DE JANEIRO, BRAZIL – Chilean President Gabriel Boric said his government would take measures to control rising fuel costs that have pushed annual inflation to a 14-year high and pressured the Central Bank to raise interest rates.

Authorities will inject US$40 million into Chile’s fuel price stabilization fund to mitigate cost hikes, Boric said on May 2 during a televised press conference.

Boric’s administration will also present bills to avoid sharp hikes in electricity and boost competition in the gas sector. The government is aware “of the difficulties that our citizens are experiencing,” Boric said.

Chile’s annual inflation is rising into double digits as global commodity costs rise due to Russia’s military operation in Ukraine.

“Chile’s workers deserve more, and we have to redistribute wealth more fairly. In the next few days, we will send a bill to stabilize electricity bills to avoid a sharp rise in the price of electricity,” added the president.

This week, the Central Bank is expected to extend the aggressive interest rate hikes that have already added 650 basis points to borrowing costs. Cost of living is also driving down Boric’s approval rating just over a month after taking office.

Similarly, as part of a package of measures to boost economic recovery equivalent to US$3.7 billion, Boric advanced the presentation of a third bill that seeks to “improve competition in the gas market”.

THE COUNTRY’S CONTEXT

“We can assure the people that the increases will not continue; we are worrying about the pockets of families on an issue as crucial as energy. We do not want any collusion,” emphasized the head of state, referring to the irregularities detected by an investigative commission of the National Economic Prosecutor’s Office in this market, facts discarded by the companies involved.

With 3.5 million people infected with covid-19 and more than 57,000 confirmed deaths, Chile has had the pandemic under control for more than a month after leaving behind a severe wave caused by the contagious omicron variant in February.

The country is under fewer restrictions than ever before, although it still maintains the mask indoors and strict limits in public places.

The Boric Administration is stepping up its efforts to help the population cope with slowing growth and rising inflation above target.

However, 86% of Chileans believe the economy has stagnated or is getting worse, according to a Cadem poll released late Sunday. The same survey showed that 53% of respondents disapproved of Boric’s government performance, up from 20% in mid-March, shortly after he took office.

Despite the pandemic, the Chilean economy recorded an increase of 11.7% in 2021, and the Central Bank projects growth of between 1% and 2% for this year.