MercoPress. South Atlantic News Agency

Inflation in Uruguay within target

The INE said the items that most affected the CPI were food and non-alcoholic beverages, and transportation. Photo: Sebastián Astorga

Inflation in Uruguay fell again in September for the fifth consecutive month, reaching 0.61% for a year-on-year total of 3.87%, according to a National Statistics Institute (INE) report released Wednesday in Montevideo.

Although the Consumer Price Index (CPI) accumulated a 4.21% increase so far this year, it dropped interannually from 4.11% in August to 3.87% in September. ”The CPI (Consumer Price Index) for September 2023 registered a monthly variation of 0.61%, accumulated in the year 4.21% and in the last 12 months of 3.87%,“ INE's document read.

The 12-month September figure is the lowest since the same month in 2005. It continues a downward trend that began in April when the year-on-year CPI was 7.61%.

”In line with expectations, September inflation was 0.6% and again eased in annual terms, placing it below 4%,“ the consulting firm Exante said on X, formerly known as Twitter. ”We foresee a certain rebound in inflation in the coming months, although closing the year within the official target range,” it added.

The Central Bank of Uruguay (BCU) sets the target range between 3% and 6% annually. Inflation was within this range for the first time in June, when it reached 5.98% over 12 months.

The INE said the items that most affected the CPI were food and non-alcoholic beverages (+0.26%) and transportation (+0.14) because of the increase in water (+33.15%, due to the drought in Montevideo) and diesel fuel (+5.94%). Nationwide, the highest increases in the last 12 months were in education (+9.04%), hotels and restaurants (+8.09%) and health (+6.79%).

The BCU's Monetary Policy Committee is to convene on Thursday to review the situation and then the board will have to decide whether to adjust the Monetary Policy Rate, currently at 10%.

Given the pronounced drop in economic activity in the second quarter while inflation continues to fall, the most likely outcome is a significant drop in the rate, it was explained.

These are some of the leading variations resulting in September's figures: Food And Non-Alcoholic Beverages (+1.01%); Meat and byproducts (-0,72%); Fish and Seafood (-1.64%); Fruits and nuts (+ 2.06%); Vegetables, tubers, and legumes (+ 2.61%); and Transport (+ 1.27%).