MercoPress. South Atlantic News Agency

Uruguay consumer inflation in 2011 reaches 8.6%, which is 43% above target

Vice-president Astori says inflation is “under control”

Uruguay consumer price inflation accelerated to 8.6% in 2011 from 6.93% the previous year, the government stats office, INE said on Tuesday.

The figure beat market expectations in a Central bank poll of analysts that predicted annual inflation of 8.19%. It also came 2.6 percentage points above the official target range of 4% to 6% inflation for the year.

This however was expected since last October Vice-President Danilo Astori admitted that inflation was going to be “above the target set for this year”, although he insisted that inflation was “under control”.

In December, consumer inflation rose 0.7%, boosted by higher prices for alcoholic beverages (6.32%), tobacco (8.11%) and transportation (1.66%), above analyst estimates of a 0.32% rise last month. Gasoline and diesel, prices which are managed by government, increased 3.52% and 3.51% in December.

Uruguay's central bank raised its key interest rate 75 basis points to 8.75% last week, citing inflationary pressures.

Economic growth in Uruguay during the third quarter climbed 7.5% from a year earlier and by 2.9% from the second quarter, partly due to a rebound in imports. Officials forecast gross domestic product will expand about 6% this year.