Uruguay It is 27% more expensive than other countries in the region, a situation that is not motivated by macroeconomic reasons or by the exchange rate, According to a study published by the Central Bank of Uruguay (BCU).
Two research works carried out by the Center for Development Studies (CED) and the consultant CPA Ferrere They appeared in the Enrique Iglesias room of the BCU this Thursday. With a presentation by the authors of the research, Ignacio Umpiérrez (CED) and Alfonso Capurro (CPA Ferrere), the objective was to contribute to quantifying the effects of the price level on the well-being of citizens and to help understand the factors behind the price differences between Uruguay and other countries
“One of the main things we found is that Uruguay “It would be 27% more expensive on average compared to a set of developed emerging economies,” he told Ambit Umpiérrez.
Regarding the methodology, the CED economist pointed out: “We took a sample of 43 countries and basically we have positive deviations. That is to say, Uruguay It is more expensive compared to the vast majority of those countries and in particular in the areas in which higher price indices are found in Uruguay, they have to do with markets where they are characterized by a high presence of products. imported, whether it be food, personal hygiene products and electronics and appliances.”
The situation is not linked to macroeconomic reasons or the exchange rate
When investigating the reasons, Umpiérrez maintained that “they basically have to do with issues microeconomic and of competence”, after which he clarified: “One of the things we found is that some regulations generate deviations from the law of a single price and also greater regulations in the labor market are impacting the margins of companies.”
“In general they are themes microeconomic and not from the point of view of exchange or relative prices,” stated the economist.
Umpiérrez delved into some concepts linked, for example, to the need to act on the labor regulation which could have an effect on prices in the medium and long term.
“It would be removing rigidities in the Work market and, on the other hand, combat the greatest shortage with higher levels of competition, competition especially in many sectors and particularly in sectors at a tradable level, sectors that are exposed to imports,” he indicated.
And he concluded: “We have a basket of hygienic products and some foods where at the import level we have a high concentration and they are, for example, levels that are considered by the competition commissions of international reference as USA wave European Union as moderate to high that should be subject to at least review by competition agencies.”
Export as output
For its part, Alfonso Capurro, of CPA Ferrere, considered the free import of fruits and vegetables as a solution to lower prices.
“The evidence shows that imports of fruits and vegetables are sporadic and not continuous and in fact, in general, imports are enabled when there are episodes of supply crises, droughts, lack of local production. This can sometimes cause prices to Uruguay They stay away from what prices are in the region,” Capurro analyzed.
“The general conclusion is that when one analyzes the last 10 years on average the price level in Uruguay It could have been 0.6 or 0.7% lower if we had had free importation of fruits and vegetables,” Capurro noted.
Based on the report, the economist indicated that “a free import would have the effect of reducing the price level in the country by 0.6 or 0.7%. CPI and an effect of up to 2.5% in what is the basket of food and drinks, which is a relevant basket in general for lower-income households.”
Support from the BCU authorities
Present at the event were the president of the BCU, Diego Labat; the vice president of the BCU, Washington Ribeiro; the manager of Economic Consulting of the BCU, Gerardo Licandro; and the commissioner for the Promotion and Defense of Competition of the Ministry of Economy and Finance (MEF), Daniel Ferres.
Labat explained that the call issued to the technicians to analyze the issue of prices sought to “contribute to the information enrichment that society manages for a debate already established in the country.”
For its part, Ferres, representing the MEF, explained that the study “will allow us to understand the functioning of the markets and understand the competitive dynamics”. In that sense, he maintained that “more competitive markets lead to lower prices, higher quality, more options and innovation.”