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Montevideo, April 25th 2017 - 14:35 UTC

Uruguay inflation at an annualized 9%; 60 days price-freeze of 1.400 items

Thursday, August 6th 2015 - 08:35 UTC
Full article 7 comments
The 1.400 items price agreement is conditioned to ensuring that the US dollar, currently almost at 29 Pesos, in the next two months does not reach 30 Pesos The 1.400 items price agreement is conditioned to ensuring that the US dollar, currently almost at 29 Pesos, in the next two months does not reach 30 Pesos
Chicken and pork were among the items with a greater impact since the government re-imposed VAT, which it had suspended seven years ago Chicken and pork were among the items with a greater impact since the government re-imposed VAT, which it had suspended seven years ago
The government's inflation target for the whole twelve months stands in the range of 3% to 7%, which it almost reached in just seven months  The government's inflation target for the whole twelve months stands in the range of 3% to 7%, which it almost reached in just seven months

Uruguay's inflation climbed 1.21% during July and reached 6.91% in the first seven months of the year and 9.02% in the last twelve months, according to the release from the country's stats office, INE. In July 2014 inflation was 0.75%.

 Food and beverage were the items which had the strongest impact on the consumer prices index. The food basket was up 1.7% with meats climbing 1.8% and vegetables 6.9%. In the case of pork and chicken, the government again slapped the VAT tax which it had suspended during the last seven years.

Likewise beverage and tobacco also had a great boost in prices as cigarettes increased 9.2% because of higher levies.

The increase in the administered fuel prices (6%) influenced the item transport which was up, 1.18% in July. Housing increased a modest 0.41% while on the falling side were Clothing (down 0.7%) and Communications (minus 0.03%).

The July and seven month record make the Uruguayan government target of inflation for the whole year in the range of 3% to 7% ever more distant. Only in the first seven months of the year the 6.91% CPI increase is almost equivalent to the higher 7% target for the whole of 2015.

Faced with this scenario the Uruguayan government reached an agreement with the supermarket chains and importers to freeze the price of 1.400 items for the next sixty days until October 4. The items include food, beverage, toiletry and cleaning articles.

This is not the first time the Uruguayan government puts in practice a prices' agreement with the main domestic suppliers in an effort to keep inflation below the two digits. Because of a long standing agreement with the unions, --which are very strong in the country--, labor payment and work conditions accords must automatically be reviewed if inflation reaches 10%.

The Uruguayan government has the advantage that it administers some of the basic prices of the economy such as public utilities' rates, power, fuel, communications, drinking water, transport fares, which it manipulates taking into account the 10% threshold. Besides it controls the stats office, INE, which despite an investment of 60 million dollars it was unable in 2012 to deliver a complete wide ranging census of a country with a population of 3.5 million.

However the 1.400 items price agreement is conditioned to ensuring that the US dollar, currently almost at 29 Pesos, in the next two months does not reach 30 Pesos, to help importers contribute with their effort.

This is an essential part of the deal since in the last 18 months, the Uruguayan currency has been moderately sliding an estimated 50% from 19 Pesos to 29 Pesos to keep in tune with the currencies of its main Mercosur neighbors, Brazil and Argentina.

Categories: Economy, Politics, Uruguay.

Top Comments

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  • ChrisR

    Shuffling the chairs on The Titanic jumps to mind!

    Stuff actually doing something BEFORE the event, that would require foresight, a commodity as rare as rocking horse shit in Uruguay and utterly beyond the Broad Fraud to get to grips with.

    So, we are going to 'miss' the 10.00% are we? One of these days (years) all the shuffling in the world is going to catch up with these children who have got hold of mom's purse and the shit will really hit the fan.

    'No Money Pepe' could not believe it when the unilateral decision he made to increase fuels at 10% across the board resulted in ALL the prices going up: he hadn't twigged that the public transport ran on fuel, ALL the goods in the country are transported by truck which run on fuel, etc, etc.

    And now some dumb fuck from The Broad Fraud has put IVA on meat and chicken and THEY are wondering why prices have gone up. As I keep saying: you couldn't make this up!

    As a country we are only ONE THIRD THE SIZE OF GREATER LONDON! Can anybody believe we have 99 'Representatives' AND 30 'Senators'! 129 hangers on for 3.3M men, women and children: 23,255 to one elected official and lets not forget the 450,000 stinking poor on the hand-outs courtesy of 'No Money Pepe' (you can see how he got that tag) PLUS 600,000 government 'workers' and monopoly 'employees'.

    With an inverted economy such as this you can spot the trouble coming a mile off, unless you are a member of The Broad Fraud.

    I am so pleased I am financially independent of these twats unlike my Uruguayo friends which I feel sorry for knowing how hard they work just to keep their families fed and clothed.

    Aug 06th, 2015 - 05:30 pm 0
  • yankeeboy

    Bad bad idea. Do these idiots not see whats happening in Venezuela?

    Aug 07th, 2015 - 12:19 am 0
  • ynsere

    Experience tells me that when a price freeze comes to an end, prices leap up. Everywhere in the world. Finance Minister Astori also knows, but the man's a cynic. He's been buggering the population for over ten years but he still has the reputation of being the “intelligent, moderate leftie”.

    Aug 07th, 2015 - 01:36 am 0
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