MercoPress. South Atlantic News Agency

Inflation under control

In spite of different scenarios and higher oil prices and interest rates, Mercosur overall consolidated inflation control during 2000, ensuring the long term decreasing tendency of retail prices.

According to the primary United Nations Latinamerican Economic Committee, CEPAL, report all member countries recorded one digit inflation, particularly Brazil and Argentina the leading nations in the trade block.

The report points out that Brazil managed a 6% inflation, a significant drop from the 8,4% of 1999, given the fact that the Brazilian currency has experienced a devaluation against the dollar of over 80% since January '99.

Argentina struggling to overcome recession recorded for the second consecutive year deflation, that is negative inflation: the retail price index in 1999 was ?1,8% and ?0,7% last year. The report indicates that the fact prices deflated at a lesser rate in 2000 can be considered encouraging, since it means the Argentine economy is beginning to pick up again after a long recession.

In Chile prices jumped from 2,3% in '99 to 4,5% last year. However last year's index is considered more "normal" since 1999 was an electoral year and in 2000 the government propped the economy in an attempt to curtail growing unemployment. Chile also suffered the consequences of the price trebling of oil imports.

The retail price index in oil dependent Uruguay was 0,9% higher last year than in 1999 when it recorded 4,2%, but Cepal estimates that in 2000 one full point can be tracked to higher oil prices. Uruguay in its second recessive year, also had trouble keeping its budget deficit in line.

Finally Paraguay and Bolivia experienced minor inflation increases, particularly as a result of political instability. Weak ruling coalitions have been unable to get legislation approved in Congress. Retail prices in Paraguay reached 8,6%, from 5,4% in 2000; and in Bolivia, 3,4% and 3,1%.-