Chile inflation accelerates to 4.1%, unemployment highest in years, growth cut

Chile's August CPI rose to 4.1% year-on-year, unemployment hit multi-year highs, and activity contracted in July, prompting the Central Bank to halve its 2026 growth forecast. The economic deterioration under President Kast's six-month-old government is squeezing households and eroding his approval rating. The data signals stagflationary pressure, with the central bank facing a policy dilemma between fighting inflation and supporting growth.