History has left Argentines with more than their share of economic trauma. Having twice suffered destructive bouts of hyperinflation in the late 1980s, they are sensitive to rising prices. When they spot inflation their instinct is to dump the peso and buy dollars.
Uruguay's inflation rate rose in January 0.74% from December as housing, hotel and restaurant prices jumped, the national statistics agency, INE, reported this week. The consumer price index rose 8.05% on the year at the end of January, INE said.
The International Monetary Fund (IMF) warned Argentina about its “lack of progress” in addressing inflation data and called on the country to implement “specific measures” within the next six months to improve it.
Inflation in Venezuela during last year reached 27.6%, which is 0.7 percentage points more than in 2010, according to a preliminary report from Venezuela’s central bank. President Nelson Merentes said that the consumer prices index “was associated to the upwards pressure generated on wholesale prices by a greater dynamism from domestic aggregate demand”.
Uruguay’s central bank unexpectedly increased on Friday its benchmark interest rate by 75 points from 8% to 8.75%o as policy makers admit inflation, and mid term expectations remain notoriously over the target range and price stability is the main concern in “the current socio-economic context”.
The Uruguayan central bank “Monetary Policy Committee” will attempt to balance ‘concern’ over inflation with the increasing international uncertainty when it meets next 29 December, said the bank’s president Mario Bergara.
Brazilian consumer prices rose faster than expected in November. Inflation as measured by the benchmark IPCA index, quickened to 0.52% last month from 0.43% in October.
Argentine lawmakers announced Monday the so-called Congressional ‘inflation index” for October which they estimated at 1.49% and is well over double the official Indec index released last week, 0.6%.
Argentina's official inflation was reported at 0.6% in October, breaking with 18 straight months of consumer prices reported at either 0.7 or 0.8%, the government reported on Friday.
Fitch Ratings agency warned Wednesday that Argentina’s new dollar controls and measures aimed at curbing capital flight could narrow Cristina Fernández political options range.Likewise, the agency stated in the communiqué that the “continuity of such unorthodox policies represent nothing but risk.”