Chilean Finance Minister Mario Marcel in his office. Cristian Soto Quiroz
After 13 months above double digits, inflation is beginning to show signs of moderation. The Consumer Price Index (CPI) registered a fall of 0.3% in April, in line with market expectations, which anticipated that it would be between 0.3% and 0.4%. With this, inflation in 12 months reaches 9.9%, for the first time under double digits, after 13 months. And it accumulates an increase of 2.1% so far in 2023.
The figure is in line with what was anticipated by the president of the Chilean Central Bank, Rosanna Costa, who in early April, after the presentation of the Monetary Policy Report (IPOM), said that "inflation will continue to fall, and we will probably see single-digit inflation in the months of April and May." However, the economist said, "that does not mean that the inflationary problem has been solved." "Single-digit inflation, at 9%, is three times the target (which stands at 3%). What we need is for it to converge to 3% and, for that, we need those factors that are behind core inflation to converge to the target," Costa explained.
From the National Institute of Statistics (INE), the agency that delivers the monthly variation of the cost of living in Chile, explained that eight of the 12 divisions that make up the CPI basket showed a positive incidence during April, three had a negative impact and one presented no incidence in the CPI figure.
Among the increases, health stood out (1.5%), which contributed 0.106 percentage points, and transport (0.8%), with 0.104 percentage points. While the decreases were mainly in recreation and culture (-1.7%), with -0.115 percentage points.
For Priscila Robledo, chief economist at Fintual, a Chilean fund manager, single-digit inflation in 12 months "could open space for the Central Bank to start cutting its interest rate in the third quarter. However, initially the cuts will have to be gradual and cautious to really consolidate the fall in inflation towards the 3% target."
Chilean Finance Minister Mario Marcel also referred to April's CPI. "This means that we are making progress in reducing inflation. Let's think that in the previous month, in March, inflation in 12 months was 11.1%, and now it is 9.9%, with a drop of more than one percentage point," he said. The economist projected that "this first half of the year will end with an inflation rate close to 8%." "We are going in the right direction, but we still have a lot to do," he added.
The secretary of state also addressed the result of the election of constitutional councilors and the overwhelming vote obtained by the Republican Party, of the conservative right. On this, he mentioned that he has met with the bench of that party to advance in the tax reform, within the framework of the consultation process carried out by his portfolio to incorporate new proposals to the project, whose first version did not pass the filter of the Chamber of Deputies in mid-March. "We are still waiting for those proposals that will come now that the electoral process has passed," Marcel said.
On whether the broad citizen support for that party could change the political dynamics to achieve agreements in Congress, Marcel explained that "to a large extent, the results show that people expect action more than words." "That means that all of us who have any possibility of influencing that action, I think we have to commit ourselves to contribute in this matter."
The minister pointed out that "no one is helped by the indefinite postponement of issues as important as tax reform, social security or the constitutional process itself" and called for progress in a climate of agreements. "I hope that all sectors, whether they have done well or badly, will have the will to embark on this effort," said Finance Minister Gabriel Boric.