MercoPress. South Atlantic News Agency

June inflation in Uruguay, 1.28% and 5.44% in six months

Economy Minister Danilo Astori goes to a Plan B

The June Consumer Prices Index in Uruguay soared 1.28% over May, totalling 5.44% inflation in the first half of the year according to the official release from the National Statistics Institute, INE.

This is the highest increase since August 2007 with 1.73%, and is well above forecasts from the 28 experts which regularly anticipate estimates to the Central Bank. The average estimate was 0.74% and the highest 1.1%. Items which had the greatest impact on the June CPI were food and beverage, housing, and transport and communications. CPI in June 2007 was 0.13%. In the last twelve months to June the accumulated inflation reached 8.42%, which is above the government's target for 2008, in the range of 3 to 7%. The President Tabare Vazquez administration had announced that if inflation keeps increasing, a plan B was ready for implementation. Apparently this would include eliminating VAT to some staples, further transport and public utilities subsidies and eliminating tariffs on food imports. However since Uruguay is totally dependent on outside provision for fuel (electricity is mostly hydroelectric) soaring oil prices have distorted or partially frustrated efforts to keep inflation down to one digit.