The price gap with Argentina, which was a problem for the economy in 2023, is reduced by leaps and bounds and Uruguay could be cheaper than the neighboring country by the end of the year, according to a survey carried out by the Catholic University of Uruguay (UCU).
Latest Border Price Index (IPF) prepared by the UCU Salto and measures the exchange difference showed an important leap in recent months, going from revealing in September that Leap It was 180% more expensive than Concord to 50% in the last measurement, corresponding to March.
Given this scenario, the situation monitor carried out by the director of the UCU Observatory, Javier de Haedo, predicted about the price gap that “it is very possible that before the end of the year it will become null or negative.”
In the survey, the economist highlighted that “despite having already become significantly more expensive, Argentina may face a path of greater increases in price”, based on the levels of the real exchange rate (TCR) bilateral with the USA from the times of convertibility.
“If that is the case, then our country will receive multiple impacts from the neighboring shore in terms of activity, taxes and prices,” the report warned, specifying that the bilateral TCR It is at 87 compared to the official and at 75 compared to the Dolar blue.
Margin for improvement in the collection and “importation” of inflation in dollars
On the other hand, the UCU warned that, after what happened in 2023, with constant crossings of Uruguayans by exchange difference, In 2024 there could be an “import” of inflation in dollars.
“To the extent that this ‘competitor’ leaves the scene, by becoming more expensive, and that the demand for goods and services in our territory increases, internal prices could begin to reflect the effect of inflation (in terms of dollars ) that will be ‘imported’ from Argentina”, observed the study.
Finally, he focused on the tax issue, recalling the diversion of consumption of Uruguayan households towards Argentina. “Part of the increase in his income was spent in the neighboring country and paid taxes there and not here. This is seen in the fact that household consumption rose by 3.6% in real terms while VAT collection “It fell by 0.9% in real terms,” he reviewed and anticipated a reversal of that effect this year.
Source: Ambito
