Chile faces recession risk amid rising inflation and unemployment

Chile is facing economic instability, with recent data indicating the country is on the brink of recession following two consecutive quarters of economic contraction. Unemployment has reached 9.5%, the highest level in five years, while annual inflation has accelerated to 4.1% due to rising food and transportation costs.

In response to the weak outlook, the Central Bank of Chile has lowered its 2026 growth forecast from a projected 1%–1.75% range to between 0.25% and 0.75%. Central Bank President Rosanna Costa noted that the current economic weakness may be more persistent than previously anticipated.

The rising cost of living is impacting even the most affordable staple foods. The price of the “completo,” a traditional Chilean hot dog, has risen from approximately 2,500 pesos ($2.60) to between 3,500 and 4,000 pesos ($3.60 to $4.10). Additionally, the monthly basic food basket cost nearly $100 in August, representing a 5% increase from the previous year.