Rosanna Costa: The Chilean economy since the September Monetary Policy Report

Remarks by Ms Rosanna Costa, Governor of the Central Bank of Chile, at the 2022 International Monetary Fund (MF)/World Bank (WB9 Annual Meetings, Washington DC, 15 October 2022.

Central bank speech  | 
08 November 2022

Recent Inflation Developments

Currently, inflation is a major concern for most economies and Chile is no exception. In Chile, although with a slight moderation in the last figure -September 2022-, total inflation reached 13.7% yoy, while core inflation -measured by the CPI excluding volatiles- continued to rise to 11.1% yoy. The sum of the August and September data - both figures known after the release of the last Monetary Policy Report (IPoM)- reveals somewhat higher inflation than expected with the surprise coming from food prices, both volatile and non-volatile.

  • Inflationary factors

Behind the evolution of inflation there are some common elements to the rest of the world and some others more idiosyncratic. Among the former, there is the increase in external costs since the end of 2021, explained by the increase in the price of raw materials and food due to Russia's invasion of Ukraine, and the disruption of supply chains. Among the internal factors, one of the main elements identified is the domestic spending imbalances accumulated during 2021 -as a result of fiscal aid and pension fund withdrawals, that reached almost 33% of GDP-, and which is especially evident in the still high level of private consumption. Added to this is the increase in wage costs associated with the tight of labor market. However, this has diminished during 2022 with the recovery of labor supply and lower demand.