The announcement sparked immediate consumer reaction, including long queues and shortages at gas stations nationwide, especially in Santiago. Due to the sudden surge, stations experienced depleted high-quality fuel inventories. Public dissatisfaction manifested in widespread protests, notably involving students in Santiago, who cited concerns over rising living costs and insufficient government support. Demonstrations led to clashes with police and intermittent metro service disruptions.
Polls reflect the political impact of the fuel hike. President Kast’s approval rating dropped approximately ten points in two weeks, from 57% to 47%, while disapproval surpassed approval for the first time since his inauguration. A majority of surveyed citizens deemed the fuel price increases avoidable and anticipate further rises in the near term.
Economic analysts forecast a significant inflationary effect due to the fuel cost surge. With fuel representing 3.39% of the consumer price index (CPI), experts estimate the direct inflation contribution may range from 1% to 1.5%, factoring in the cascading impact on transportation and food prices. This challenges the central bank’s inflation target of around 3% for 2026, with market expectations adjusting upwards to as much as 4%. The government has introduced mitigating measures including freezing public transport fares in Santiago through December, targeted subsidies for taxi operators, and promoting a gradual application of future fuel price changes. Nonetheless, inflationary pressures and social discontent remain key risks confronting the nascent administration’s economic agenda.
This article was curated and published as part of our South American energy market coverage.
