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Food, education and healthcare rising prices keep Uruguay’s inflation out of target

Wednesday, September 4th 2013 - 00:36 UTC
Full article 4 comments
Minister Lorenzo confident Uruguay can face the ‘coming volatility of international markets’     Minister Lorenzo confident Uruguay can face the ‘coming volatility of international markets’

Uruguay’s inflation in August kept climbing and reached 1.04%, totalling 6.74% in the first eight months of the year and 8.86% in the last twelve months, which is well above the Central bank target of 4% to 6%, according to the latest report from the local Statistics Office, INE.

A year ago August inflation stood at 0.93%, and 5.39% in the first eight months of 2012 and 7.88% in the previous twelve months.

In August Education, 2.01%; Food and non alcoholic beverage, 1.86%; healthcare 1.53%; Other goods and services, 0.98%, Transport, 0.81%; Leisure, 0.62% and House appliances, 0.74%, were the items with the highest increases.

In the Food and beverage item, Meats, 3.22%; Fresh legumes and vegetables, 2.55% and coffee, tea and other infusions soared 10.06%.

According to INE in the last twelve months, Food jumped 10.6%; Housing, 14.66%; Healthcare, 9.52%; Education, 11.8%; Furniture and house appliances, 8.61%; Restaurants and Hotels, 9.72% and Others goods and services, 8.64%.

Despite a strong performance of the country’s economy since 2003, Uruguay has been unable to keep inflation on target in most years because of a monetary expansive policy fuelled by the government’s budget deficit currently running above 2% of GDP; consumer credit and rigid labour laws with strong unions.

Since in October 2014 presidential elections are scheduled in Uruguay it’s hard to see the ruling coalition taking effective measures to contain spending. Furthermore the current administration of President Jose Mujica has taken advantage of financial markets to extend in time sovereign debt payments, and has sufficient reserves to face “any major volatility”.

“Uruguay is prepared to face markets’ volatility, which have been forecasted in coming months” given expectations of a Federal Reserve announcement, any moment, that it is ending its stimuli program, said Economy minister Fernando Lorenzo during a banks´ congress on Latam banking and economies.

Lorenzo added that Uruguay has managed to ‘reduce macroeconomic risks’ and has ‘high rates of liquidity’ which has given it access to contingent loans that leave aside concerns about debt repayments or expenditure financing.

Top Comments

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  • ChrisR

    Lorenzo is the idiot who, last year when UTE were deeply in the red, praised them for MANAGING to pass the costs on to the consumer. NEWS flash: it’s a fucking government MONOPOLY you moron, where else can we go for electricity? My electric went up FOUR times in 12 months!

    And now he and the rest of the five year old (mentally) “Ministers” wonder why they cannot control the inflation! Stop the stupid bastard Pepe from selling the future for his “Glorious” social inclusion programmes that do nothing to encourage new jobs and educate the illiterate. But I wonder if they are illiterate because they did not work hard in school? Two of my best friends are secondary teachers and I know the problems they have with the majority not bothering to do the work that through the year is a requirement for them to pass the exams. And Pepe himself denigrated the teachers personally by claiming they only work ‘a few weeks a year’ so what are they complaining about.

    Now I have a shock announcement. If these figures are from INE, they must be having lessons from INDEC. I do not recognise the majority of these numbers, which DO NOT INCLUDE government monopoly price increases. Guess which items go up disproportionately to the others? Yes, you have got it right.

    I run an Excel spreadsheet, YonY for every Pesos that we spend, everything. So I know what things cost us now going back almost three years. To January 2013, Housing 9.2% (I own my house so it is only council tax), Medical Insurance 12.4% (YTD 16.6% and another rise due in Jan), Food (we only buy the best) is at least 20+% YTD! Electric YTD 27.9% and who knows when the next rise will be foisted onto us by this epitome of the worst run business in Uruguay? Water (OSE) 4.1%. Motoring costs: car tax 11.6% (UYU 8549) Motorbike tax 6.1% (UYU 9892: yes, I pay MORE tax for my bike than the car!)
    Insurance. Both more or less cancel each other out. Gardener (does a great job) 12.5%. Broadband (ANTEL the BEST run monopoly

    Sep 04th, 2013 - 03:22 pm 0
  • Stevie

    Chris, when you present the numbers as a percentage of the total, you end up with a sheet telling you, funny enough, how much a specific product or service added up in relation to the total.
    It says nothing about the products or services going up or down in price.

    But you know this too, don't you?

    Sep 05th, 2013 - 06:29 am 0
  • yankeeboy

    Uruguay is going to get dragged down with the imminent Rg crash.
    Pepe needs to be put out to pasture immediately.
    These Commies are ruining a very nice little country.

    Sep 05th, 2013 - 07:12 am 0
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