MercoPress. South Atlantic News Agency

Uruguay's inflation stable in April but still above target figures

The Economy Ministry has an inflation projection for 2022 of 5.8%, but more realistic assessments speak of 8%

Uruguay's interannual inflation during the month of April of 2022 reached nearly 9.4%, as prices rose below projections thanks to sharp decreases in fruits, vegetables, and meat.

The Consumer Price Index (CPI) stabilized after four months of steady growth, April's 9.37% showed almost no variation when compared to 9.38% in March, the National Statistics Institute (INE) reported Wednesday.

April's 0.49% monthly inflation was well below the Central Bank's (BCU) Expectations Survey, which had forecast it would be around 0.72%.

However, yearly inflation above 9% highly exceeds the Uruguayan Government's target range (3% to 7%). In the first trimester of 2022 accumulated inflation reached 4.9%, way above last year's 3.6% in the same four-month period.

According to INE's press release, the main impacts on the monthly variation of the CPI in April were food and non-alcoholic beverages (-0.05%), housing (0.09%), transportation (0.24%), and restaurants and hotels (0.13%).

Vegetables in April fell 7.7%, fruits 1%, and meat 0.7%, while bread and cereals went up 1.9%, milk, eggs, and cheese 2%, oils and fats 3.2%, coffee, tea, cocoa, and yerba mate 2.4%.

Housing rose 0.45%, cooking gas 5%, transportation 2.5%, gasoline 4%, diesel (9.2%) and urban buses 6.7%, the INE report also showed. Airplane and boat tickets also soared by 6.4% and 27.8% respectively.

The exchange rate between the Uruguayan peso and the US dollar showed a 0.7% in favor of the South American currency by 8% against last year's closing rate.

The Economy Ministry has an inflation projection for 2022 of 5.8%, while average estimates by the BCU mention between 8.5% and 6.8% for the next 24 months.

In order to mitigate the upward pressure on prices, President Luis Lacalle Pou has sent to Parliament a bill to remove the VAT from barbecue beef (in force for two months) and another initiative to do the same regarding bread, crackers, pasta, and noodles.

The Upper House unanimously passed Tuesday a draft aimed at eliminating VAT surcharges for 6 months from 19 products of the basic food basket, including flour, sugar, noodles, rice, oil, salt, polenta (corn flour), tomato pulp, lentils, beans, powdered milk, eggs, cocoa, coffee, oatmeal, beef (specific cuts), chicken, pork and bread.