Fuel Prices Increase

CHILE - In Brief 24 Mar 2026 by Igal Magendzo
Yesterday, the government announced measures that will take effect this Thursday, March 26, increasing gasoline prices at the pump by 34% and diesel prices by 70%. The stated objective is to prevent a short-term decline in fiscal revenues resulting from the reduction in the specific fuel tax under the current fuel price stabilization mechanism (MEPCO). In addition, mitigating measures were announced for selected prices, including urban transportation and kerosene, with an almost negligeble effect on CPI. The main CPI implications are as follows: The shock implies that gasoline CPI rises from 3.6% to 9.9% in March and from 4.3% to 24.8% in April. For diesel, the revisions are from 1.4% to 14.3% in March and from 5.4% to 48.6% in April. Under the assumption that the shock is transitory, a faster-than-previously-expected reversal would begin in the following months. Impact on inflation (incidence) * In March, the combined incidence of gasoline and diesel would rise from 0.11 pp to 0.34 pp (gasoline: 0.28 pp; diesel: 0.06 pp). * In April, the combined incidence would increase from 0.15 pp to 0.99 pp (gasoline: 0.77 pp; diesel: 0.22 pp). * We estimate a cumulative effect of around 0.4 pp on headline CPI by December of this year, assuming the shock is mostly transitory. Please do not hesitate to contact us with any questions.

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