Cost of Living Crisis Under Kast: August Inflation Surges to 4.1%, Doubling Expectations

Original article: Golpe al bolsillo bajo Kast: inflación de agosto duplica lo esperado y llega a 4,1% anual

Under the leadership of José Antonio Kast, the rising cost of living continues to impact Chilean families, as inflation accelerated in August, exceeding market expectations.

The National Institute of Statistics (INE) reported on Tuesday that in August 2026, the Consumer Price Index (CPI) recorded a monthly variation of 0.6%, a figure that doubles the forecasts of financial operators, who anticipated an increase closer to 0.3%.

With this result, the cumulative inflation for the year reaches 3.6%, while the yearly variation soars to 4.1%, solidifying a scenario of price pressure on basic goods that directly affects the purchasing power of Chilean households.

The widespread increase in prices across nine of the thirteen divisions indicates a broad inflationary front. In August, three divisions saw negative impacts and one recorded no incidence, but the weight of increases in food and transportation was decisive.

The food and non-alcoholic beverages division led the increase with a rise of 1.4%, contributing 0.317 percentage points (pp) to the monthly variation and 1.013 pp to the figure reported over 12 months. This category, which holds the highest weighting in the CPI basket, reflects the direct impact on families’ daily expenditures, especially for essential goods.

According to the INE, this category recorded monthly increases in nine of its 15 classes. The most significant increase was for meats (2.7%), contributing 0.139 pp, while vegetables, legumes, and tubers (5.5%) added 0.125 pp.

Out of the 81 products in this division, 48 saw price increases, with beef prices rising 3.9% monthly, contributing 0.089 percentage points to the overall index and accumulating a year-to-date increase of 7.3%. Potatoes also saw a significant increase of 17.8%, contributing 0.047 pp with an accumulated variation of 49.2% for the year.

Fuel Price Increases

According to the INE report, transportation emerged as the second major inflation driver, with a 1.6% increase contributing 0.201 percentage points. Within this division, air passenger transport recorded a 24.6% increase, being the main contributor to the push with an input of 0.186 pp, followed by fuel for personal vehicles (0.9%), contributing 0.036 pp. This trend in the transportation sector not only affects travelers but also generates knock-on effects on the logistical and distribution costs of goods across the country.

International air transportation saw a striking increase of 32.6% in its fees, exerting additional pressure of 0.167 percentage points.

Meanwhile, gasoline experienced a 0.9% increase, contributing 0.031 pp, with a year-to-date increase of 17.6%. This outcome was anticipated as August marked the first full month of the fuel price hike announced by Finance Minister Jorge Quiroz, close to $30 per liter for gasoline and up to $90 per liter for diesel, an increase that directly affects the costs of both public and private transportation.

However, not all sectors showed increases; some divisions acted as a counterweight to the overall inflation. The information and communication division registered a 0.3% decrease, indicating a negative impact of -0.017 percentage points. Mobile phone services and subscription-based audiovisual content led the declines, with reductions of 1.9% and 1.8% respectively. Similarly, new car purchases noted a 0.8% decrease, while medications for digestive and metabolic issues fell by 3.8%, providing isolated relief amid the widespread inflationary scenario.

The CPI excluding volatile items rose by 0.1%, while the index excluding food and energy registered an increase of 0.4%. These figures suggest that price increases are not exclusive to seasonal or energy products but are beginning to infiltrate the structural costs of the economy.

Energy, for its part, recorded a monthly variation of 0.4%, exerting pressure on Chilean households.

Annually, the transportation division has accumulated a 6.8% increase, closely followed by restaurants and accommodation at 6.6% and recreation at 6.4%. These figures contrast with the annual decreases of 4.0% in clothing and footwear, and a drop of 3.6% in insurance and financial services.

The magnitude of the August data, doubling market expectations, raises alarms about the future evolution of prices. With a cumulative variation of 3.6% so far this year and an annual projection exceeding 4%, Kast’s government faces a challenging economic landscape.