Chile’s Consumer Price Index (CPI) for October 2025 rose by 0.40% MoM, matching market expectations and marking a notable increase from the flat reading in September. This uptick signals a mild resurgence in inflationary pressures after a period of relative calm. The annual inflation rate now stands at approximately 3.20%, slightly above the central bank’s 3% target, according to the latest data extracted from the Sigmanomics database.

Drivers this month

• Shelter costs contributed 0.18 percentage points (pp), reflecting rising rental prices.
• Food and beverages added 0.10 pp, driven by seasonal supply constraints.
• Transport inflation rose by 0.07 pp, influenced by higher fuel prices.
• Used cars and apparel exerted downward pressure, subtracting -0.05 pp combined.

Policy pulse

The 0.40% MoM increase places inflation slightly above the central bank’s comfort zone but remains consistent with a gradual normalization scenario. The Central Bank of Chile’s benchmark rate currently stands at 7.50%, with policymakers signaling a cautious approach to further hikes.

Market lens

Immediate reaction: CLP/USD strengthened 0.30% post-release, reflecting investor confidence in Chile’s inflation containment. Breakeven inflation swaps for 2-year horizons edged up by 5 basis points, while 2-year government bond yields rose modestly, signaling market anticipation of steady monetary policy.

Chile’s inflation dynamics must be viewed in the context of broader macroeconomic indicators. The latest GDP growth estimate for Q3 2025 stands at 1.10% QoQ, a slowdown from 1.50% in Q2 but still positive. Unemployment remains stable at 7.20%, near the 12-month average of 7.30%. Wage growth has moderated to 3.50% YoY, consistent with subdued inflationary pressures.

Monetary Policy & Financial Conditions

The Central Bank of Chile has maintained a steady policy rate since August, balancing inflation risks against growth concerns. Financial conditions have tightened slightly, with credit spreads widening by 10 basis points over the past month. The Chilean peso’s resilience against the US dollar supports import price stability, mitigating imported inflation risks.

Fiscal Policy & Government Budget

Fiscal policy remains expansionary but prudent. The government’s budget deficit narrowed to 2.80% of GDP in Q3 2025, down from 3.10% in Q2, reflecting improved tax revenues and controlled spending. This fiscal stance supports domestic demand without overheating the economy.

Drivers this month

• Shelter inflation rose 0.50% MoM, the highest since March 2025.
• Food prices increased 0.40% MoM, reflecting supply chain disruptions in agricultural sectors.
• Energy costs were stable, with fuel prices flat after recent volatility.

Market lens

Immediate reaction: CLP/USD appreciated 0.30% within the first hour, reflecting market relief that inflation remains contained. The 2-year Chilean government bond yield rose by 7 basis points, while inflation breakevens increased slightly, indicating moderate inflation expectations.

Looking ahead, inflation in Chile faces a mix of upside and downside risks. The baseline scenario projects a gradual decline in monthly CPI increases to 0.20–0.30% by Q1 2026, keeping annual inflation near the 3% target. This assumes stable commodity prices and moderate wage growth.

Bullish scenario (20% probability)

Stronger-than-expected domestic demand and persistent supply bottlenecks push inflation above 4% YoY by mid-2026. This would likely prompt the central bank to hike rates further, tightening financial conditions.

Base scenario (60% probability)

Inflation moderates gradually, supported by stable fiscal policy and contained wage growth. Monetary policy remains on hold, with inflation converging to the target by late 2026.

Bearish scenario (20% probability)

External shocks, such as a sharp commodity price drop or geopolitical tensions, depress inflation below 2% YoY, risking deflationary pressures. The central bank may consider easing policy to support growth.

Chile’s October CPI print signals a cautious return of inflationary pressures after a period of stability. The 0.40% monthly rise aligns with expectations but underscores the need for vigilance amid evolving domestic and external risks. Monetary policy is likely to remain data-dependent, balancing inflation control with growth support. Fiscal prudence and stable financial conditions provide a buffer, but geopolitical uncertainties and commodity price volatility remain key risks.

Key Markets Likely to React to CPI

The Chilean peso (CLP) and local government bonds typically respond sensitively to CPI releases, reflecting inflation’s impact on monetary policy expectations. Additionally, the US Dollar Index (DXY) often moves inversely to CLP strength. The copper price (COPPER) is crucial given Chile’s export profile, as inflation can influence commodity demand. Lastly, the USDCLP forex pair directly tracks inflation-driven currency moves.

• USDCLP – Directly impacted by inflation and monetary policy shifts in Chile.
• BCI – Chilean bank stock sensitive to interest rate changes.
• CMPC – Consumer goods firm affected by inflation-driven input costs.
• DXY – US Dollar Index inversely correlated with CLP strength.
• COPEC – Energy sector stock influenced by fuel price inflation.

FAQs

What is the latest CPI reading for Chile?

The October 2025 CPI rose by 0.40% month-over-month, marking a return to inflation growth after a flat September.

How does this CPI print affect Chile’s monetary policy?

The reading supports a cautious stance by the Central Bank of Chile, likely maintaining current rates while monitoring inflation trends closely.

What are the main inflation drivers in Chile currently?

Shelter and food prices are the primary contributors to the recent inflation increase, with transport costs also playing a role.

Key takeaway: Chile’s October CPI signals a mild inflation rebound, requiring balanced policy responses amid mixed economic signals.