In January 2024, the Consumer Price Index (CPI) recorded a monthly variation of 0.7%, with a twelve-month increase – with respect to the spliced series of the index – of 3.8%.
Eleven of the thirteen divisions that make up the CPI basket contributed positive impacts on the monthly variation of the index, and two presented negative impacts.
Among the divisions with increases in prices, food and non-alcoholic beverages (1.0%) stood out with 0.215 percentage points (pp.) and housing and basic services (1.2%) with 0.205 percentage points (pp.).
The remaining divisions, which had a positive influence, jointly contributed 0.492pp.
Among the divisions that recorded monthly decreases in their prices, transportation stood out (-1.6%), with an incidence of -0.219pp. as reported by the INE.
In this way, the CPI for January was markedly above expectations (0.2% to 0.3% m/m), registering a monthly increase of 0.7% (3.8% y/y).
The magnitude of the increase in the month of January is due, on the one hand, to the new reference basket used, which gives more importance to the Food and Non-alcoholic Beverages and Housing and Basic Services divisions, while, on the other hand, On the other hand, the rise in the exchange rate would have influenced this month’s record, according to the analysis released by the Latin American Center for Economic and Social Policies of the Catholic University (Clapes UC).
The new basket was also used by the Minister of Finance, Mario Marcel, to explain the January CPI.
According to Marcel, after participating in the launch of the National Fund for Reconstruction in Viña del Mar, this record of 0.7% reported by the National Institute of Statistics (INE) “is the first CPI data that is generated with the new basket, which is based on the Family Budget Survey for the year 2022.”
He added that part of the rise can be explained by some reversal in the price fall that occurred the previous month (in December the monthly variation of the CPI was -0.5%).
This month the INE began measuring the CPI through a new basket and calculation methodology, based on 2023=100. Along with the publication of the first CPI data under the new measurement – January 2024 – the reference series for the year 2023 was made public and a linked series that covers from 2009 to the present, for which Minister Marcel mentioned that the result required additional explanation.
He indicated that, with the January figure, “the annual variation that appears in the spliced index is 3.8%, therefore, inflation continues to decline compared to the 3.9% annual rate recorded the previous month.” He also detailed that the combined figure – which is used for all the legal effects that the CPI has, such as determining the price of the UF – is different from the inflation that arises from the new CPI basket.
“Closer to the goal”
“Along with delivering the January information, the INE also delivered a series with the new reference basket for the entire previous year. When this series is used and the variation is estimated over 12 months, the result is an annual CPI in January of 3.2%,” explained Marcel. Based on the reference series published by the INE, it is the one that the Central Bank has historically used for the purposes of economic analysis and understanding the evolution of inflation, he noted.
In summary, Marcel stated that “even though the variation of the month was above expectations, inflation in one year, measured by the new basket, is considerably lower than that which results only from the joined figures. In other words, there is a difference of more than half a point downwards, therefore, the data are telling us that, throughout the last year, inflationary pressures have been somewhat lower than those that the CPI had been measuring in its previous base and which, therefore, means that we are closer to reaching the inflation goal.”
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