Chile Economy — 08 March 2016

santiago vega


Alana Gale

photo “Mercado” by Fernando Valenzuela

8 March 2016. Santiago, Chile.

Recently, El Mostrador published an article on the cost of groceries in different countries, called the “basic shopping cart.” The question the article posed was this: what is the average salary needed to pay for that?

The English consultant group Move Hub, which calculates statistics on people living outside the United Kingdom, presented a global ranking based on how much a family of four needs to spend each week for the basic shopping cart in different countries. They then ranked them by the percent of salary needed to pay for that.

As one of Move Hub’s investigators Alexandra Yanik explains, it is impossible to identify a “universal basic cart” because food varies from country to country. Nevertheless, the Move Hub team tried to find items that would be in basic shopping carts in all countries.  That included meat, milk, rice, pasta, potatoes, lettuce, tomatoes and fruit.

In Latin America, the percentages ranged from 16.45% (in Panama) to 100.54% (in Honduras). Chile falls in the lower end of this range, with 18.94% of the average salary being used to pay for basic groceries.

By contrast, according to the Move Hub data, only 7.04% of the average salary in the United States (US) goes toward groceries.  So Americans spend a lot less of their salary on food in comparison with the Chileans. As we shall see, many items in Chile cost a lot more than in the USA., which shows gas prices at gas stations across the USA, showed that the average US gas price was $1.82 per gallon as of Friday. In Chile, the latest gas was $3.80 per gallon, based on one observation we made.

Electricity is another item that is less expensive in the United States. In a small, non-scientific sampling of two power bills, electricity was $0.12 per kilowatt in the US, whereas in Chile it was $0.21 per kilowatt.

One thing, however, remains a big expense for Americans: college education. According to the American organization College Board, the average cost of an undergraduate education—which encompasses tuition, room and board, textbooks, and transportation—ranges from $16,833 to $47,831. The difference depends on factors such as whether the degree is two-year or four-year, or if the university is public or private. For students attending a four-year, in-state, public university and living on campus, the average cost is $24,061.

Meanwhile, in Chile, tuition is just about as expensive for students as it in the USA or even more if you look at the tuition/income ration.  For example, at the University of Chile, for the 2016 school year, tuition ranges from $2.5 to $5.2 million pesos ($3.700 to $7,600 USD), varying by the major.  Half of the people in Chile earn less than $5,280 per year.  Seventy percent earn less than $7,500. The top 5% earn $17,604 or more.  The government has a plan to make college tuition free, but that is stuck in the congress which is still working on doing that for primary and secondary schools. In Chile, even public schools are not free as parents pay tuition for grade school.

Finally, the last thing to mention is that the Chilean peso has sunk 40% against the US dollar since 2011.  This causes imports to cost more for Chileans (Since you buy those with dollars.) and expenses for tourists and those whose salary is paid in dollars to go down a lot.


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