The January CPI registered a year-on-year variation of 5.09%, while business expectations begin to approach the Central Bank’s ceiling.
Economic policies aimed at controlling the inflation in Uruguay continue to give good results, as demonstrated by the last Consumer Price Index (CPI) published by the National Institute of Statistics (INE), which registered 5.09% year-on-year in January. In this way, the index that observes the variation in prices chained its eighth consecutive month within the target range established by the Central Bank of Uruguay (BCU)3%-6%.
Since June 2023, when the CPI was located for the first time within the target range After showing a significant decline compared to May – from 7.1% registered in the fifth month, it fell to 5.98% year-on-year – inflation at the local level appears to be a controlled phenomenon within the margins established by the BCU. In fact, for him Center for Development Studies (CED)the price increase could consolidate at this “new level” between 4.5% and 6% this year.
In January, the CPI was 5.09%, which marked not only the eighth consecutive month within the target range, but also a decrease compared to the December indicator, which was 5.11%. Anyway, the lower value It was recorded in September, where the interannual price variation was 3.87%, the lowest in 18 years—after this record was also broken in August, with 4.1%, in relation to the same month in 2022.
Meanwhile, the projections made by both the BCU and different organizations indicate that inflation would remain within the target range—that the monetary authority, within the Macroeconomic Coordination Committee which integrates together with Ministry of Economy and Finance (MEF)remained unchanged until 2025—for two more years.
“We are satisfied. We are where we wanted to be when we set out this plan three years ago. “We are very close to the center of the range,” said the president of the BCU, Diego Labat, in interview with Ambit in December, assessing the active role of the entity from monetary policy against inflation.
Uruguay: seventh place in the region and inflationary expectations that are reduced
At current inflation levels, Uruguay It occupies seventh place in the ranking that orders countries according to their inflation indices, with the value reaching the end of 2023. With this CPI, it was located behind Ecuador (1.3%), Bolivia (2.1%), Paraguay (3.7%), Chili (3.9%), and Mexico and Brazil (4.6%).
Meanwhile, projections for 2024 indicate that inflation could be reduced further: the Macroeconomic Coordination Committee published a inflation expectation around 4.9% for this year, while for 2025 they indicated an interannual CPI of 5.3%.
According to the consultant Exante, Meanwhile, inflation would reach 4% between March and May, remaining low during the first half of the year. Although during the second half, this trend could be reversed, showing a rebound in the CPI that would approach 6%, although still within the government’s target range.
For their part, the analysts consulted by the BCU They still place their inflation expectations above the target range, with a median of 6.05% at the end of December — although the projection was reduced compared to the previous measurement, which indicated an index of 6.44%. Anyway, the businessmen They continue to expect stronger variations in prices, with a CPI of 7% at the end of 2024.
Source: Ambito
