MercoPress. South Atlantic News Agency

July inflation in Uruguay highest in 18 months

Uruguay consumer prices increased 1,29% last July, the highest surge in 18 months with an accumulated inflation in the seven months of 2005, equivalent to 3,45%.

According to the latest release from the Statistics Office the consumer prices index in the last twelve months increased 4,42%.

Inflation in July 2004 was 1,01%; 6,58% in the first half and 10,15% in the whole 2004.

The items with the highest increase in July were: Furniture and home appliances 7,62%; medical services 1,69%; transport and communications 1,13% and leisure 1,04%. On the other hand Clothing and Footwear contracted 0,80%.

In spite of the July jump, inflation remains inside the target range 5,5 to 7,5% agreed with the International Monetary Fund.

Last June IMF and Uruguay agreed on a 1,18 billion US dollars three year financial assistance program.

This week arrived in Montevideo an IMF mission for the first review of the three year agreement, which according to Uruguayan sources will be "very positive".

"Uruguay is in line with the 3,5% GDP primary budget surplus; reserves have increased over 280 million US dollars and the public sector's gross debt will be trimmed to 12,5 billion US dollars", said a source from the Uruguayan Economy Ministry.

"Beside we've also reformed the internal revenue office which was one of the points agreed to help increase tax collection and combat evasion".

However this week the Central Bank revealed that the estimated economic expansion target for 2005 of 6 to 7%, was lowered to 5 to 6%, including the 3,7% spill over effect from the extraordinary growth of last year.