Chile’s Boric Takes Aim at High Fuel Costs as Inflation Runs Hot

(Bloomberg) -- Chile President Gabriel Boric said his administration will act to tame surging fuel costs that have driven annual inflation to a 14-year high and pressured the central bank to hike interest rates.

Officials will inject $40 million into the country's fuel stabilization fund to smooth out cost increases, Boric said during a televised press conference on Monday. The administration will also present bills to avoid sharp electricity hikes and to boost competition in the gas sector, he said.

The government is aware “of the difficulties facing our citizens,” Boric said. “The rising cost of living creates anguish that we can't be indifferent to.”

Chile's annual inflation is surging toward double-digits as global commodity costs spike in the aftermath of Russia's invasion of Ukraine. This week the central bank is expected to extend aggressive interest rate hikes that have already added 650 basis points to borrowing costs. The cost of living increases are also dragging down Boric's approval rating just over a month into office.

Boric's administration is stepping up its efforts to help the population cope with slowing growth and above-target inflation. In April, his government unveiled an economic plan worth $3.7 billion to help segments such as women that have lagged in the nation's recovery, and last week announced an agreement for minimum wage increases.

Still, 86% of Chileans believe the economy has either stagnanted or is worsening, according to a Cadem poll published late on Sunday. The same survey showed 53% of respondents disapprove of Boric's management of the government, up from 20% in mid-March shortly after he assumed office.

In separate remarks on Monday, Finance Minister Mario Marcel said the government will detail the fiscal costs of the bills when they are introduced.