MercoPress. South Atlantic News Agency

Chile's inflation for March above market projections

There are no magic wands to solve inflation issues, Marcel explained

For a month that began under one president and finished under the new one, Chile's inflation for March of 2022 reached 1.9%, slightly above market projections of up to 1.4%.

Interannually, the consumer price index was 9.4%, the highest since 1993, Chile's National Statistics Institute (INE) reported Friday. Air transport, education, and bread were the items with the greatest impact.

The Central Bank had warned that inflation could shoot up to 10% in the first half of the year and that only in the second part of the year could it begin to ease.

Finance Minister Mario Marcel admitted the “situation is worrisome” and warned of the consequences that allowing a fifth withdrawal of 10% of pension funds would have. “It is a worrying situation, an additional reason not to throw more fire on the bonfire of prices.”

He added that “the only way to lower inflation is through monetary policy” because “there are no magic wands to solve inflation issues.”

“We have to let the Central Bank do its job, it is doing it, and we have to, meanwhile, support families, especially those who live on a salary, to cushion this impact of inflation,” Marcel went on. He also acknowledged crises and recessions were very unbalancing.

Regarding the projected fifth withdrawal, the minister explained that “this is not show-business, it is not an issue that sells, that is linked to the egos of the authorities.”

“It is about preventing, avoiding, a measure that would harm many people in Chile,” he pointed out.

“We have already seen this during the third withdrawal, it means an increase in the cost of mortgage loans, it means that many families will not be able to access financing for their homes, it means an increase in inflation,” Marcel stressed.

“Part of what they are withdrawing will be lost due to the higher cost of living. But the worst thing is that it hurts the people who are not withdrawing funds, because they no longer have them.” There are five million individual accounts that have zero pension funds as a result of previous withdrawals.