Reflections on Inflation in Chile

Abstract

As of early November 2021, expected “inflation” in Chile stands in the range of 6.4% to 7.0% for this year. This is a relatively high rate compared with what we were accustomed to and also with the 3% annual target range set by the Central Bank of Chile. On December 31, 2020, the value of the UF (Unidad de Fomento, Chile's inflation-indexed unit of account) was Ch$29,070.33, and on September 9, 2021, it broke through the Ch$30,000 barrier, reaching Ch$30,008.40. This value could reach Ch$31,014 on December 31, 2021, which would imply an increase of Ch$1,944 during 2021; compared with the UF's rise of Ch$760 during 2020, this conveys the magnitude of the impact of inflation. Continue reading...