MercoPress. South Atlantic News Agency

Inflation in Uruguay remains ever so far from the Central bank annual target

Food prices in Uruguay, the item which has most climbed according to a FAO report to May

Consumer prices in Uruguay during July increased 0.77% while twelve-month inflation reached 8.75%, which is the highest since last February, and well ahead of the 8.21% to June, according to the latest release from the country’s National Stats Institute, INE.

During July the food item price was up 0.51%, mainly because of a 1.91% increase in beef compensated by a fall in legumes and vegetables of 3.06%.

Housing and public services prices were up 1.15% boosted by an increase in water rates (4.13%); cooking gas, (3.37%) and apartment maintenance costs. Likewise health care soared 3.28% as the monthly rate for the private health scheme was up 7.58% and the emergency services, 3.45%.

Thus with the latest indexes, the July inflation rate and the annualized 8.75% are ever more distant from the government’s target of 4% to 6% consumer prices increase in the twelve months.

According to the Uruguayan Central bank survey, analysts expected July inflation to reach 0.84%.

In related news a FAO report points out that the item from the basic consumer’s basket which has most increased in Uruguay in the last twelve months is food. Although food prices have been advancing faster than other items in most countries the FAO report says Uruguay is among those with the highest increase.

In effect during May, Uruguay was only below Venezuela and Brazil in the food prices ranking for the last twelve months. While prices to May in Uruguay had increased 10.6%, in Brazil they were up 13.5% and in Venezuela 48.1%. In the three countries food prices climbed faster than the overall index, in the case of Uruguay it was 10.6% compared to 8.1%.

Food prices have a significant impact on the different Latinamerican countries. While the average goods and services consumers’ basket in the region stands at 7.4%, food climbs at an annual average of 11.5%.

Again Argentina is a special case because of the lack of reliability of its stats. Although according to official Indec stats, food inflation to May has been 6.3%, if the stats from the Province of San Luis, ruled by the opposition and with reliable numbers are considered, the true increase of food items in Argentina was 32.9%.

Last but not least the FAO report referred to Uruguay indicates that the food prices issue has become more dramatic in June. In effect the item which most increased in the last twelve months has been food with 11.34% followed by education, 11.27%. And this happened despite the fact that the overall twelve month inflation to June was moderately up: from May’s 8.06% to 8.21%.