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Montevideo, April 19th 2019 - 08:35 UTC

February inflation in Uruguay again above target: 8.89% in the last twelve months

Tuesday, March 5th 2013 - 05:29 UTC
Full article 4 comments
Shopping for the school year beginning in March had a significant impact Shopping for the school year beginning in March had a significant impact

The Consumer Price Index, CPI, in Uruguay climbed 0.99% during February, accumulating 2.91% in the first two months of the year, and 8.89% in the last twelve months, far above the government’s target of 4% to 6%, according to the National Institute of Statistics, INE Monday release.

Inflation in 2012 reached 7.48% which was also above target despite several accounting cosmetic measures from the government such as keeping government-managed public utilities rates frozen or with rebates if residential power consumption was contained, plus subsidizing urban transport.

However February is the month when parents go shopping for the school year that begins in March and this item Education soared 4.47% in the second month of the year with an overall incidence of 0.15 points.

A second item with a strong increase in the second month of the year was Housing which climbed 2.65%, with an incidence in the monthly index of 0.38 points. This was made up of 0.80% for Rent, 3.20% for drinking water and 5.69% for power, both supplied by government monopolies.

Food and Beverage (non alcoholic) increased 0.99%, while Leisure and Culture were down 2.95%

The February inflation index was in line with private estimates according to the monthly poll from the Central bank among the leading companies of the country that anticipated 1%.

Inflation has become one of the main challenges of the Uruguayan government that has seen the fiscal budget deficit balloon to 2.8% of GDP in twelve months and has caused serious rifts inside the administration of President Jose Mujica.

While some of his advisors insist in spending to help promote domestic demand and keep the economy steaming, from the Ministry of Economy the approach is completely orthodox given the regional and global scenario: time to cut expenses, to make savings and promote austerity at least for the next twelve months, ahead of 2014 which is an electoral year.

Last December the Central Bank raised 25 basic points the reference rate to 9.25%, well above the Brazilian Selic, in an effort to try and contain inflation.

Categories: Economy, Latin America, Uruguay.

Top Comments

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  • ChrisR

    January is the usual time for increases by the government and its monopolies and they haven’t disappointed.

    UTE, that paragon of mismanagement from the highest level to everyday intolerance to weather by their damnable distribution system has the highest rate band increasing by 6.8%. There were THREE increases by UTE last year with a significant reduction in supply stability.

    If Pepe really wants to reduce inflation he could start with clearing out the windmill lovers at UTE and recruit some good engineers from Europe to improve the system. Getting rid of the USA inspired overhead disaster in cities would help. Looking at the constant activity by the heavy mob replacing local transformers on a VERY regular basis the whole system is creaking along with little or no extra capacity in it.

    Mar 05th, 2013 - 05:57 pm 0
  • redpoll

    Chris With all the rain we have had UTE is producing very cheap current. I was at Rincon de Bonete a month ago and the turbines were going at full capacity (BTW a nice country hotel there which I would thoroughly recommend), so Iwould imagine the Baygorria and Palmar dams are working at capacity also. So why do we have to pay so much for our electric power? Windmills are only 14% efficient

    Mar 05th, 2013 - 06:30 pm 0
  • ChrisR

    2 redpoll

    It's not only the electric generation we are paying for and with the choice of windmills and combined power schemes UTE seem determined to waste money hand over fist. Look at the fiasco over the combined power contract: they mixed up the operating divisions of the chosen supplier and accused them of misleading UTE! Shades of Pluna.

    The other costs ‘hidden’ in the charges are the distribution of the energy they manage to generate. The system is woefully inadequate at the local level and the street O/H cables show all the signs of long-term overheating. This is not at all surprising given the increase in the use of electrical appliances in the home.

    And don’t forget the administration costs of the ‘Directors’, from what I have experienced they couldn’t run a piss-up in a brewery.

    Put this lot together and you can see what the consumers are up against. Hopefully the water capacity will hold up as winter approaches so we should not see power outages due to extremely low voltages, which of course helps them make more money with the power factor shift in their favour.

    I suppose we will see outages due to the O/H system being incapable of taking the lightning strikes and pulling the breakers out.

    I know we are only 3 million people but having an efficient electrical supply is vital to attracting new businesses. Who wants to set up a new factory where the electrical supply keels over at the first sign of stress in the system?

    Monopoly problems though, don’t ya love them? :o)

    Mar 05th, 2013 - 09:19 pm 0
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