Inflation in 2022 exceeded the budget assumption by 7.2 percentage points

Public Economics

Inflation in 2022 exceeded the budget assumption by 7.2 percentage points

By Alonso Valdés•2026-10-23
#fiscal policy#projections#dipres#macroeconomics#chile

At a glance

What economic assumptions underpinned Chile’s budgets for 2022 to 2025? The 2022 budget assumed annual average inflation of 4.4%, compared with an observed 11.6%, a difference of 7.2 percentage points. This gap changed the nominal environment in which revenues had to materialise and spending commitments had to be financed.

The 2022 budget was prepared with inflation of 4.4%

The draft budget for 2022 assumed an average price increase of 4.4%. The projection comes from the Public Finance Report (Informe de Finanzas Públicas, IFP) for the third quarter of 2021, which Chile’s Budget Office (Dirección de Presupuestos, Dipres) identifies as the report accompanying the bill’s discussion. Observed inflation reached 11.6%, leaving the assumption 7.2 percentage points (pp) below the outcome. The comparison uses the scenario submitted with the bill, without reconstructing every update during its passage through Congress (Dipres, IFP Q3 2021).

Inflation in this comparison measures the change in the annual average consumer price index (CPI). It differs from December’s change against the same month in the previous year. Keeping this definition makes it possible to compare the expectation at budget preparation with the year’s actual average price level, without switching measures between the two endpoints.

The 6.5% assumption for 2022 belongs to a later update, published in February of that year. Using it as the starting point would reduce the difference against the outcome, but would answer another question: how far a revised estimate, made after the budget was submitted, differed from the result. The timing of the decision matters as much as the size of the gap.

Inflation in 2022 exceeded the budget assumption by 7.2 percentage pointsBudget assumption versus observed annual average inflation, 2022 to 2025. In 2022: 4.4% versus 11.6%.Annual average inflation, %0481220222022: Budget assumption 4.400%2022: Observed 11.643%4.411.6−7.2 pp20232023: Budget assumption 6.322%2023: Observed 7.581%6.37.6−1.3 pp20242024: Budget assumption 3.477%2024: Observed 4.266%3.54.3−0.8 pp20252025: Budget assumption 4.221%2025: Observed 4.213%4.24.2Budget assumptionObserved Inflation in 2022 exceeded the budget assumption by 7.2 percentage pointsBudget assumption versus observed annual average inflation, 2022 to 2025. In 2022: 4.4% versus 11.6%.Annual average inflation, %0481220222022: Budget assumption 4.400%2022: Observed 11.643%4.411.620232023: Budget assumption 6.322%2023: Observed 7.581%6.37.620242024: Budget assumption 3.477%2024: Observed 4.266%3.54.320252025: Budget assumption 4.221%2025: Observed 4.213%4.24.2BudgetObserved
Figure 1. Inflation in 2022 exceeded the draft budget assumption by 7.2 pp. Circle: assumption; diamond: observed. Source: Dipres, IFP Q3 2021, Q3 2022, Q3 2023 and Q3 2024; Central Bank of Chile, data downloaded 2026-10-08; author’s calculations. Download data (CSV).

The 2023 budget assumed inflation of 6.3%, against an observed 7.6%. The difference was 1.3 pp, considerably smaller than in 2022. The earliest available projection for 2023, at 3.2%, had already been revised before that budget was prepared. The distance between the earliest forecast and the eventual result therefore cannot be attributed entirely to the scenario used to begin the budget discussion (Dipres, IFP Q3 2022).

Economic assumptions shape the scope for spending

The budget commits spending before the State knows how much revenue it will actually receive. Estimating that revenue requires a scenario for economic activity and prices. Expected growth helps project the bases on which taxes are collected; inflation affects their nominal expression. A budget prepared with a different price path from the one that subsequently emerges will operate with nominal magnitudes that differ from those anticipated.

Copper adds a revenue source whose market price is determined outside Chile’s budget process. The projected copper price enters estimates related to mining, while the exchange rate converts dollar amounts into pesos. A higher copper price can coincide with changes in the dollar or in economic activity that alter the aggregate result. The differences need to be considered together before drawing a conclusion about revenue collection.

The structural balance rule links that revenue scenario to the spending the budget can commit. The structural balance seeks to remove the temporary effects of the economic cycle and copper prices from fiscal revenues. Its calculation uses reference parameters, including the long-term copper price, alongside market assumptions. Additional actual revenue therefore does not automatically create an equal amount of room for permanent spending.

Inflation also affects the purchasing power of approved expenditure. A nominal appropriation must finance goods and services whose prices may change differently from what was expected; some obligations also include adjustment mechanisms. This note measures how far assumptions diverged from outcomes, without estimating the net effect of those differences on the fiscal balance.

Copper stood at US$4.30 when the 2025 budget was prepared

The draft budget for 2025 assumed an average copper price of US$4.30 per pound. The observed average was US$4.50, a difference of US$0.20 per pound. This is the London Metal Exchange market price, which differs from the long-term reference price used in the structural calculation (Dipres, IFP Q3 2024).

The US$0.81-per-pound revision obtained by comparing the earliest and latest projections for 2025 covers a longer horizon. The first was US$3.49, published in February 2022; by the time the 2025 budget was submitted, the projection had already reached US$4.30. That revision describes how the economic scenario changed before the budget decision. The US$0.20 difference instead measures the distance between the draft budget assumption and the eventual outcome.

The exchange rate provides another comparison for 2025: the assumption was CLP887.0 per US dollar, against an observed average of CLP951.6. The difference of CLP64.6 per dollar changes the conversion between the two currencies. Identifying it helps explain why looking only at copper prices provides an incomplete picture of the nominal scenario underpinning the budget.

The budget date changes the comparison across years

Growth in 2023 exceeded the assumption used when the bill was submitted: a contraction of 0.5% was projected, compared with observed growth of 0.7%. The opposite occurred in 2022 and 2025, when assumed growth exceeded the outcome. The sign changes across years, so a conclusion about the direction of the differences depends on which budget and variable are being examined.

Assumed growth exceeded the outcome in two budgets and fell below it in twoFour separate scales. Each point is the budget assumption minus the observed value, 2022 to 2025. Negative means the assumption was lower.Real GDP (pp)20222022: 0.436 pp0.420232023: −1.131 pp−1.120242024: −0.354 pp−0.420252025: 0.209 pp0.2−2−101Average CPI (pp)20222022: −7.243 pp−7.220232023: −1.259 pp−1.320242024: −0.788 pp−0.820252025: 0.008 pp0.0−10−505LME copper (US$/lb)20222022: −0.017 US$/lb−0.0220232023: −0.236 US$/lb−0.2420242024: −0.293 US$/lb−0.2920252025: −0.197 US$/lb−0.20−0.4−0.20.00.2Exchange rate (CLP/US$)20222022: −133.332 CLP/US$−133.320232023: 29.134 CLP/US$29.120242024: −111.169 CLP/US$−111.220252025: −64.635 CLP/US$−64.6−200−1000100 Assumed growth exceeded the outcome in two budgets and fell below it in twoFour separate scales. Each point is the budget assumption minus the observed value, 2022 to 2025. Negative means the assumption was lower.Real GDP (pp)20222022: 0.436 pp0.420232023: −1.131 pp−1.120242024: −0.354 pp−0.420252025: 0.209 pp0.2−2−101Average CPI (pp)20222022: −7.243 pp−7.220232023: −1.259 pp−1.320242024: −0.788 pp−0.820252025: 0.008 pp0.0−10−505LME copper (US$/lb)20222022: −0.017 US$/lb−0.0220232023: −0.236 US$/lb−0.2420242024: −0.293 US$/lb−0.2920252025: −0.197 US$/lb−0.20−0.4−0.20.00.2Exchange rate (CLP/US$)20222022: −133.332 CLP/US$−133.320232023: 29.134 CLP/US$29.120242024: −111.169 CLP/US$−111.220252025: −64.635 CLP/US$−64.6−200−1000100
Figure 2. Assumed growth exceeded the outcome in two budgets and fell below it in two. Each point shows the budget assumption minus the observed value, with a separate scale for each variable. A negative value means the assumption was lower than the outcome. Source: Dipres, IFP Q3 2021 to Q3 2024; Central Bank of Chile, data downloaded 2026-10-08; author’s calculations. Download data (CSV).
BudgetReal GDP
(pp)		Average CPI
(pp)		LME copper
(US$/lb)		Exchange rate
(CLP/US$)
20220.4−7.2−0.02−133.3
2023−1.1−1.3−0.2429.1
2024−0.4−0.8−0.29−111.2
20250.20.0−0.20−64.6
Table 1. Draft budget assumption minus observed value, by budget year. Units appear in the headings. Source: Dipres and Central Bank of Chile; author’s calculations. Download data (CSV).

The comparison covers four budgets prepared under different circumstances. Each uses the report accompanying the bill as its starting point, rather than the last projection issued during the year. This preserves the moment relevant to fiscal preparation. Later updates remain available in the explorer, allowing readers to follow how additional information was incorporated during the fiscal year.

Explorer. Change the variable and year to compare projections with the observed outcome. Open full screen.

What this note does not establish

  • The differences do not demonstrate manipulation or a persistent forecasting bias.
  • The note does not estimate how much revenue changed or what fiscal balance would have resulted from different assumptions.
  • A projection released well into the year incorporates more information about that same period; its closeness to the outcome alone cannot establish the quality of the initial forecast.

Data and method

Four assumptions from the draft budgets for 2022–2025 were compared with Central Bank data downloaded on 2026-10-08. Each report explicitly identifies its relationship to the following year’s bill. The data cut-off remains 2026-10-22. CPI is calculated from the change between averages of twelve monthly indices; copper and the exchange rate use daily observations with valid data. GDP uses annual chained volume, reference year 2018; subsequent national accounts revisions can change the comparison.

The earlier analysis examined five variables, three candidate years and two starting dates. Editorial review added this comparison of four budgets while preserving the previous analysis. The twelve conflicts identified between reports remain excluded. The budget data, observed inputs and recalculation program allow readers to reproduce the results.

Sources