The CPI fell from 4.8% last month and follows the global and regional trend, according to the latest data from the INE.
The inflation retailer (measured by CPI) hit another low since 2005, falling from its annual figure of 4.8% to 4.1%, according to the National Statistics Institute (INE), so that inflation in Uruguay is accompanying the global and regional trend, with a decline in the rates of increase in consumer prices that is observed in all countries, with exceptions known as Argentina.
The contractionary monetary policy of the Central Bank of Uruguay (BCU), which is maintained even with the recent reductions in interest rates, It has had its effect, among other things, motivating a decrease in the exchange rate that is transferred to the prices of a large part of the tradable products and also of some services.
In addition, the policies themselves in developed countries are causing prices to fall. prices international markets for various products, which also contributes to the decline in the inflation. These international prices were the ones that rose at the end of the pandemic and accentuated the rise with the outbreak of the war in Ukraine, carrying the inflation last year to all-time highs. The trend is now reversing.
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Drought and fuels
Uruguay It also has its peculiarities: the drought it had generated a significant shortage of fruits and vegetables, which led to particular price increases in those items, which is also now being reversed. in such a way that the inflation of food fell to 6.2% annually.
At the same time, despite recent rate increases for fuels, the prices of gasoline and diesel they are well below their level a year ago, which also contributes to the drop in annual inflation. The transportation sector, within the CPI, falls 5.1%.
The exchange difference with Argentina
At a commercial level, it is also being incorporated that the great difference in prices with Argentina is having its incidence to lower inflation in Uruguay, stopping increases or even motivating losses, especially in items such as cleaning items, toiletries, clothing and restaurant and hotel services, among others.
In other words, the drop in relative prices with Argentina has exported deflation to Uruguay (conversely, Argentine neighbors in Between rivers who complain that the arrival of Uruguayans increases their prices). The dynamics of relative prices in economies in the long run tends to overcome rivers and stocks. Not to be underestimated.
Source: Ambito
