MercoPress. South Atlantic News Agency

Uruguay with the fourth highest inflation in the region last year

A fall in international demand and in the price of commodities helped contain inflation in Latinamerica with the exception of Venezuela.

Uruguay’s inflation in 2009 was on target, 5.9%, but nevertheless it was the highest in Latinamerica behind Venezuela, Jamaica and Argentina, according to data from Uruguay’s central bank. Overall the global slowdown impacted on the region with lower inflation rates.

For the fourth year running Venezuela was top of the list with the consumer prices index soaring 25.1% last year, but below the rate of 2008.

At the other extreme several of the region’s countries experienced deflation in 2009 compared to 2008. Such was the case of Chile with a negative inflation of 1.4%, followed by Guatemala and El Salvador with 0.28% and 0.2% respectively.

Retail prices last year were also among the lowest in years for several countries: Colombia recorded 2%, the best in ten years; Honduras, 3%, the lowest in 22 years; Costa Rica, 4.05%, the least in 38 years and Paraguay with 1.9%, had the minimum in forty years.

For Uruguay, 5.9% was the lowest in four years and in Mexico with 3.57% it was also the best performance in four years.

Venezuela this month announced a massive devaluation of the Bolivar creating a two exchange rate system: one for “essentials” increasing the value of the US dollar 17% and the other for non-essentials with a devaluation of 100%.

The Venezuelan government of President Hugo Chavez also sent the Army to the streets to control prices following the massive devaluation and if necessary when abuses detected, to close shops.

In 2008 Uruguay reported a higher inflation rate than last year but was better (lower) ranked among the “inflation-prone” countries: seventh.

With the exception of Argentina in all regional countries inflation in 2009 was lower than that of 2008. This is attributed to global slowdown and the fall in commodities prices.

In 2009, Venezuela was the only country with a two-digit inflation compared to 2008, when six countries experienced two-digit inflation.

The Uruguayan Central Bank estimates the country’s inflation in the range of 4 to 6% (compared to 3 and 7% in 2009) for the next 18 months. A Central Bank survey of private experts puts 2010 twelve months inflation at 6.11% with a floor of 5.27% and a maximum, 8.82%.