Chile is looking for a method to help lower the price of fuel. It believes that fuel is the indicator here pushing inflation to high levels. Inflation has hit record levels in Chile, not seen in over a decade. This is according to Chile's Finance Minister Andres Velasco.
According to Velasco, as quoted by Bloomberg.com, "We're studying other alternatives that will allow us to contribute to this process of containing and ideally reducing inflation."
Prices in fuel costs here dropped 11 cents with a recapitalization of the fuel price stabilization fund last week. There was no mention of tax cuts on fuel, though.
Earlier this month, Chile's economy saw good growth, with an growth of 5 per cent in 2007. The main reason the economy here is doing so well happens to be on the country's exports of copper, which is currently in high demand. Chile is the world's largest exporter of copper.
The government is run a surplus in about 8 per cent or 9 per cent of GDP for the last several years, mainly due to the increase of copper demand. This has helped the country to accumulate some US $30 billion in government funds, as well as central bank reserves.
