Rising Fuel Prices Drive Inflation Higher: Central Bank Adjusts Forecast to 4%

Original article: Bencinazo presiona la inflación: Banco Central la revisa al alza y la ve en 4%

The Central Bank has revised its inflation forecast upward, anticipating a Consumer Price Index (CPI) of 4% for the second quarter of 2026. In the Monetary Policy Report (IPoM) published this Tuesday, it highlighted that this increase will be driven by the historic rise in fuel prices in Chile.

According to the institution, while the December 2025 IPoM projected an annual inflation rate of 3.2%, this has now been raised to 4.0%.

The central bank warned that the ongoing conflict between the United States and Israel against Iran has «considerably» increased external fuel prices and added a high degree of uncertainty to both global and local economic perspectives, «following a more robust external momentum observed at the beginning of the year.»

Based on the financial institution’s analysis, considering the statistical close-out information, «in the central scenario, inflation is expected to see a significant increase in the second quarter mainly associated with rising international fuel prices.»

«For total inflation, revisions are concentrated in the short term, mainly linked to the impact of war on international fuel prices. This results in a significant inflation increase, expected to hover around 4% annually starting in the second quarter,» the Central Bank stated in its projections.

Rising Fuel Prices Drive Inflation

The issuing authority noted that the increase in fuel prices, termed «bencinazo,» which was recently announced by the government of José Antonio Kast, will exert upward pressure on inflation.

«This scenario incorporates the local fuel price hikes announced on Monday, March 23,» it stated in the March IPoM.

According to the Ministry of Finance, the increase—expected to reach $370 per liter for 93-octane gasoline and up to $580 for diesel—will take effect this Thursday, following the activation of the Fuel Price Stabilization Mechanism (MEPCO).

This increase means that filling a 48-liter tank with 93-octane gasoline could cost an additional $17,000, while fully fueling a truck with an 80-liter diesel tank would increase costs by $46,000.

In its report, the Central Bank predicted that inflation could return to around 3% by the second quarter of 2027.