Economy

Annual inflation in Chile reaches its highest level since 2008

Prices rose 6.7% in November from a year earlier; Latin America as a whole is facing higher levels of inflation than other regions

Santiago, Chile, 2013. Photo: Daniel Garcia Neto/ Creative Commons (licensed under CC BY-NC 2.0).

Chile‘s annual inflation official rate rose to its highest level since 2008, putting pressure on the central bank to make another sharp hike in its benchmark interest rate at next week’s monetary policy meeting. Prices rose 6.7% in November from a year earlier, the National Statistics Institute (INE) reported.

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Latin America as a whole is facing higher levels of inflation than other regions. Recently, a pool made by Bloomberg with the main Wall Street banks forecasted that the average rise in the cost of living in the region by the end of 2021 will be above 10%, the highest globally.

Since July, the country’s central bank has been raising borrowing costs and, at its last meeting, surprised investors with the biggest increase in two decades. Policymakers have warned that the economy is about to overheat due to stimulus measures that have generated demand, fearing a recession in 2022.

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The country’s presidential elections, whose second round will take place on December 19, are also putting pressure on the markets. As LABS’ columnist Ariel Palacios has already shown, social conflicts, an ongoing constitution, and the end of 30 years of the hegemony of the historic parties are generating the greatest period of uncertainty in the Andean country in the last half-century. Chileans will have to decide between the leftist Gabriel Boric and the far-right Jose Antonio Kast.

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