Chile’s Inflation Slows, but Economic Pressures Remain

Chile’s National Institute of Statistics reported that consumer prices rose 0.2% in April 2025, a slowdown from March’s 0.5% increase.

Annual inflation now stands at 4.5%, down from 4.9% the previous month. This marks the sixteenth consecutive month that inflation has stayed above the central bank’s 2% to 4% target range.

The central bank has kept its benchmark interest rate at 5% for three straight meetings, signaling caution as inflation remains above target.

Officials expect inflation to drop to 3.8% by December 2025 and reach the 3% target in early 2026.

They attribute the current high inflation partly to energy costs, especially after the end of a long-standing electricity price freeze.

Electricity prices are set to rise by about 50% by 2026, adding pressure to households and businesses.

Core inflation, which excludes volatile items like food and energy, remains close to 4% annually. Food and non-alcoholic beverage inflation eased to 4.4% in April from 5.1% in March.

Other sectors such as recreation, culture, and transportation also saw slower price increases.

However, housing and utilities prices still rose by 10.6% over the year, reflecting the impact of higher energy costs.

Chile’s Inflation Slows, but Economic Pressures Remain

Chile’s economy has performed better than expected, with GDP growing 2.6% in 2024. Strong exports, particularly in agriculture and retail, have helped offset global uncertainties.

The country’s current account deficit narrowed to 1.5% of GDP in 2024, showing resilience in trade.

Despite these gains, risks remain. External factors, such as potential oil price spikes and slower growth in key trading partners, could hurt Chile’s outlook.

The country imports most of its oil, making it vulnerable to global price changes. The central bank continues to monitor these risks closely, ready to adjust policy as needed.

Chile’s inflation rate, while high, is much lower than in some Latin American peers, such as Argentina and Venezuela.

The country’s disciplined monetary policy and strong export sector have helped contain price pressures, but households still feel the impact of rising costs, especially for housing and utilities.

The central bank’s commitment to its inflation target remains firm, but it faces a delicate balancing act as global uncertainties persist.

More: Chile news in English, every day from The Rio Times.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error