Inflation in Chile has already become a matter of concern among economists and financial specialists. For some, an increase in the inflationary spiral is projected this year, due to the rise in prices in different sectors of the economy of that country. Alejandro Weber, dean of Economics and Government at the Universidad San Sebastián (USS), warned that annual inflation will be higher than projected a few months ago. For him, will close at around 4.2%.
In his opinion, this will impact Chilean consumers and will have repercussions on the general economy. “This is very bad news for the pockets of Chileans,” he warned. Victor Martinez, executive director of the Center for Research on Business and Society at the Universidad del Desarrollo, has a similar opinion. He clarified that inflation will be pressured upwards by the increase in various itemswhich will modify the estimates. “Postponing the normalization in price growth until 2026,” he questioned, as reported by Emol. Martínez projects that the impact of the growth in the rates of goods and services will result in an increase of 0.4 percentage points. This, consequently, will prevent inflation from closing this year below 4%.
To illustrate, the specialist spoke of the value of the Chilean unit of development, also known as UF. According to Martínez, the rise in inflation will mean that, by the end of the year, the UF increase 150 pesos more than what was projected at the beginning of 2024.
The Unidad de Fomento (UF) is a readjustable index, calculated and authorized by the Central Bank of Chile for credit operations in Chilean pesos carried out by banking companies and savings and credit cooperatives.
What drives inflation in Chile?
According to economists, the inflationary increase in Chile is due to the increase in goods and services in the economy. Thus, the electric sector, transportation and agriculture, are the factors that push inflation upwardaccording to specialists. In the electrical sector, an increase in the price of this vital service was imposed in Chile starting this July. There is talk of increases of up to 60% in some cases and it occurs in the middle of winter, which has brought temperatures below 5 degrees. The increase will be staggered according to the type of consumption and will be applied in installments during July and October of this year, and January 2025. On the subject of transportation, it was learned that the government increased the value of public transportation in Santiago, the capital, to 10 pesos since last week. Initially, The increase was to 20 pesosbut the rejection by the population led the government to cushion the increase by subsidizing half the fare and freezing it for students and senior citizens.
According to economists, Chile's inflation may be higher than estimated this year. Source: Statista. In any case, public transport will increase both in the capital and in other regions of the countrywhere there will also be an increase of 10 pesos. And in the matter of agriculture, due to the low temperatures that are recorded in that country, the price of some foods is rising. Considering that Winter hit seven Chilean regionsvegetables have already taken a leap. The local firm GPS Property estimates that the price of lettuce has increased by 40% in recent days, hovering around 2,000 pesos per unit. Meanwhile, potatoes and onions have increased significantly, with prices ranging from 1,000 to 1,500 pesos per kilo. For all of the above, it is foreseeable that the inflationary increase will begin to be seen from this month of July. For Juan Ortiz, senior economist at the Economic Context Observatory of the Diego Portales University (OCEC UDP), it is expected that this month will “trigger a new increase in prices for different goods and services.”
Bitcoin can help Chileans
With inflation forecasts for Chile to rise, driven by energy, transportation and food prices, it is natural that concern arises among the population and that, given the need, they seek alternatives to protect their purchasing power. In this context, bitcoin is presented as a possible solution. Due to its decentralized nature, this digital currency It is not susceptible to the inflation that fiat money suffers.
In addition, BTC is resistant to manipulation by governments or central banks. This means that is not at the mercy of monetary policy decisions that the States take, in this case, the Chilean one. BTC is easy to buy, sell and store, and can be used for make payments online and in some physical stores. This makes it a practical option for those looking to diversify their investments and protect their assets. In Chile, bitcoin is not unknown. In that country there is an entire emerging community that is growing more and more. Currently there are dozens of businesses and commercial premises that accept BTC and other types of cryptocurrencies. In addition, Events are organized and education about this ecosystem is promoted.The right formula to raise the level of awareness about bitcoin in any society.