MercoPress. South Atlantic News Agency

Eight months retail inflation in Uruguay reaches 6.98%

Consumer prices in Uruguay during August increased 1.02%, surprising private estimates. According to the monthly release from the country's Statistics Institute, INE, accumulated retail inflation in the first eight months of 2008 reached 6.98% and 7.26% in the last twelve months.

The items which had the most impact on the August index were food, beverage, housing, transport, communications and education. Food prices kept strong because of increases for bread, meats, vegetables and fresh fruit. Housing soared because of higher rents and maintenance costs. In spite of the August impact, Uruguayan authorities are confident that inflation has begun to yield particularly with energy prices falling, and the end of winter months which means food prices will become more accessible with the new crops. Uruguay has managed to maintain a reasonable inflation level by subsidizing public transport, eliminating VAT on many food items, transferring a percentage of windfall earnings from export commodities to the domestic market (i.e. milk, flour, rice) liberating the import of fresh fruit and vegetables and freezing basic utility rates provided by government monopolies such as electricity and telephones.