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Original article: El efecto dominó del “bencinazo” de Kast: camioneros evalúan subir un 30 % tarifas, costo de vida se acelera y aumenta la inflación

Historic Fuel Price Surge in Chile and the Internal Shock

Cover Image: XTB Publication / Gasoline, MEPCO and Inflation in Chile 2026: Impact on the IPC and IPSA

As of March 26, 2026, Chile is experiencing the largest fuel price adjustment in decades due to the effective removal of the Fuel Price Stabilization Mechanism (MEPCO) by José Antonio Kast’s government, resulting in an internal shock. According to ENAP data, the price of 93-octane gasoline increased by $372.2 per liter (32%), 97-octane by $391.5 (31%), and diesel by $580.3 (62.4%).

As a result, this shock is predominantly inflationary. The Central Bank of Chile raised its inflation projection for December 2026 from 3.2% to 4.0%, warning that it could remain around 4% starting in the second quarter of the year. Economists estimate that just the first-round effect (direct impact of gasoline on the CPI, with a weighting of 3.39%) could add between 1.0 and 1.2 percentage points to the monthly index.

“The inflationary impact of this measure is already being assessed by economists. Projections indicate an increase in the Consumer Price Index (CPI) in the coming months. Acuña believes that ‘inflation could see a slight uptick between March and June of this year, before returning to below 2.4% year-on-year by the end of the year’. In this context, a CPI of around 0.66% is projected for March,” states Francisca Cuadros, a Commercial Engineer and Master in Applied Economics specializing in Public Policies at UC, in a publication in CLAPES.

The greatest pressure on the cost of living comes from the diesel price surge (62.4%), a critical input for logistics. The National Confederation of Truck Owners (CNDC) is considering passing this increase on with a 30% hike in freight rates, which would create a strong second-round effect.

“The second-round effect is structurally more significant and persistent. Diesel, which is a critical input for cargo transport, moving approximately 98% of the physical goods in the country, has jumped by 62.4% in this episode. The rise in transport costs will be reflected with a lag in the final prices of food, consumer goods, and industrial inputs, with an estimated impact of 0.3 to 0.4 additional percentage points during the second quarter. The total cumulative effect is projected to be between 1.35 and 2.01 extra points on the CPI,” highlights the specialized outlet XTB.

The Chain and Domino Effect: Transport Considers a Fare Increase of at Least 30%

According to a report on Saturday, March 28 from Radio Cooperativa, the National Confederation of Truck Owners (CNDC) announced that it is “considering raising the transportation rates of products by at least 30% due to the increase in fuel prices that took effect this Thursday.”

As reported, the president of the association, Juan Araya, noted that these truck drivers will not receive subsidies, unlike school drivers and taxi drivers. “This affects small truckers, the ‘pyme’. If rates don’t go up, there won’t be trucks to transport the loads. They either raise it as needed – we’ve agreed it has to be 30% – or else there won’t be trucks to unload the containers from the ships,” emphasized Cooperativa.

Projections: The Rise in Food, Goods, and Services

• Food: Basic products such as fruits, vegetables, and produce that travel long distances (e.g., tomatoes from Arica) will see immediate increases in markets and supermarkets, highlights the CLAPES publication.
• Basic Basket: According to a publication in CLAPES, the cost of the basic basket could exceed $90,000, with an annual price growth in food expected to reach 4.2% between March and July.
• Cross-Effect: The rise will also impact rents (via UF), schools, insurance, and services, creating an overall economic impact: “There will be a chain of price increases in food, production, schools, insurance, everything; because the UF will also increase. It has a total economic impact. The challenge is to start releasing investment projects that have been stalled and could help lower the unemployment rate,” says Jorge Berríos, academic director of the Finance diploma program, Unegocios of the Faculty of Economics and Business (FEN) at the University of Chile, according to a FORBES publication.

Macroeconomic Projections and Growth

The adjustment forced the Central Bank to lower growth expectations for 2026, from a range of 2%-3% to 1.5%-2.5%. Although analysts point out that the high copper price (projected at USD 5.4 per pound) acts as a buffer for finances and terms of trade, the loss of household purchasing power and the increase in operating costs in mining and agriculture will moderate economic activity.

The specialized outlet Banca y Negocios highlights this fact: “The IPoM of March warns that inflation will have a ‘significant short-term rise due to the increase in fuel prices, likely settling around 4% annually starting in the second quarter of this year, a projection incorporating the increases in gasoline and diesel prices -around 32% and 62%, respectively- announced last Monday and taking effect this Thursday.”

The government has implemented a plan that includes freezing public transport fares (Metro and buses) until December 2026 and targeted bonuses for transporters. However, analysts warn that these measures mitigate the immediate social impact on a small sector of society but do not address Chile’s structural vulnerability, especially in the face of external energy shocks, given its dependence on oil imports.

Thus, the historic fuel price increase represents a severe supply shock that will cut economic growth, elevate inflation to 4%, and significantly erode households’ real income. The domino effect in freight transport (with 30% increases in transport tariffs) will raise the total cost of goods, hitting the most vulnerable households particularly hard during the second quarter of 2026.

Various analysts assert that generating such an internal shock with the removal of MEPCO was unnecessary; at the very least, the measures could have been gradual.

Is There a Fiscal Crisis in Chile?: Macroeconomist Expert Claims External Debt is the Lowest in the Region

Macroeconomist Daniel Titelman, Director of the Economic Development Division of CEPAL, called President Kast’s comments about “no money” in the public coffers “very strange and imprecise.” In an interview with DW Channel, Titelman emphasized that the authority inherited “a country with a level of external debt around 41%, which is the lowest in Latin America, and very low compared to OECD countries and the developed world.”

The expert detailed that, although the actual deficit exceeded projections, with a current deficit of “2.8% of GDP” and a structural deficit of “3.8%,” the situation is not one of fragility. “Indeed, we would all like to have public finances with a lower deficit, but this is a State with some fiscal constraints, yet it is a strong State, and a fiscal situation, compared to any country in the region or elsewhere, is solid,” he affirmed.

Titelman emphasized that the decision not to soften the price increases is a political criterion rather than a real constraint. “One will never completely stop the price rise, but one can soften it and make people pay it over a more extended period, which has a lesser impact on quality of life and consumers’ pockets,” explained the CEPAL director.

He concluded that, given Chile’s comparative fiscal strength, “other resources could have been used” to mitigate citizens’ impact, indicating that economic management is “more a political decision than dictated by fiscal accounts.”

View the DW segment with analysis of Chile’s economy:

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