Inflation In Chile

"There's a nasty little inflation spike developing in Chile," according to Geoffrey Dennis, global markets strategist at Citigroup, as quoted by Matthew Walters over at Bloomberg.

Kinda resembles my stats :-)

Anyway, the complaint I hear on the news and from people is that as prices shoot up, piss wages don't budge. In the very short term, I think that's true. But for the sake of counter-argument:

But aren't wages going up?
Bachelet recently raised the minimum monthly wage by CH $14,000.

That's US $26 a month. I calculated that to be an hourly wage increase of US $0.21, assuming a 40-hour workweek, (yeah right) and don't expect overtime, bitch. At the same, the price of milk has shot up 250 pesos in about a year, which is roughly half a dollar, meaning it'd take minimum 2 1/2 hours of work at the new wage in order to afford that liter of milk.

Meanwhile the Catholic Church and Chilean politicians get real noisy about a voluntary wage increase. Despite the obscene hypocrisy and unaccountability that promulgates, at least they acknowledge it's a problem: a family of four making the current minimum wage in Chile just can't get by.

Of course, future President of the Republic, billionaire Sebastian Piñera, made a lofty proposal for subsidizing worker wages, rather than forcing Chile's, i mean, destitute export industry into paying better wages. But if that's his game why not just subsidize local farmers and import more produce, and shit, to control inflation? After all, it looks like analysts are placing much of the blame for inflation squarely on Winter.

Economic Growth
It's not all Winter's fault. It's also those pesky workers, fucking with my equity. And they're complaining about the price of milk???

According to Walters, by entering the workforce in droves -- 200,000 per year -- Chileans are creating greater consumer demand. Because with that 16-cent increase, we're talking about some big bucks flying around.

Yes, they're working, but where is their spending power coming from? Their wages? Or rather, the credit they're now being extended because they've got jobs? I honestly don't know, but it just seems weird.

Also, it's funny that Piñera, the future president of Chile, would propose a government wage subsidy. You'd think that as the billionaire behind Chile's LAN Airlines among other ventures, he'd be little more profit minded. After all, he's the guy who introduced credit cards to Chile in the late 1970's, in the thick of Pinochet's military regime. (BTW: Juaquín Lavín, the candidate from Pinochet's party who lost a couple election cycles ago, has given Piñera, of the more centrist RN party, the green light in the upcoming election).

So, there you have it. My slapped together analysis that real wages are plummeting, at least in the short term, and overall nobody really cares. Anyone got a solid rebuttal?

Thanks Focus Economics for the graph!