Although the inflation has been within the target range for a consecutive year, the CPI would tend to grow in the coming months and would be close to the 6% ceiling, due to factors ranging from the year-on-year comparison to the situation in Argentina and the exchange delay, according to a report from the Catholic University of Uruguay (UCU).
The acceleration of inflation began last month and is expected to maintain that trend in the coming months, despite which the Central Bank of Uruguay (BCU) is confident that it will remain between 3% and 6% in the Monetary Policy Horizon (HPM).
In parallel, the expectations of economic agents They are located at the lowest level in the historical series, with an CPI close to the ceiling of the target range.
The “negative inflation” of 2023
The first of the factors that will influence the rise in inflation is the year-on-year comparison with a 2023 in which there was deflation. From the UCU They warned that “in the immediate future this indicator will continue to rise, as it did in May from the floor of 3.7% in April.”
When justifying this situation, they pointed out that they will leave the mobile year data for another two months of 2023 with “negative inflation”, such as June and July, with a decrease of 0.5% and 0.4% respectively.
Added to the panorama is another very low record such as that of August, with a CPI of 0.2%, so that any increase in the coming months will be felt.
The “imported inflation” from Argentina
On the other hand, the study carried out by the observatory headed by the economist Javier de Haedo focused on what is happening in Argentina, where recently the price gap to the rhythm of Dolar blue.
“It is very likely that Argentina will become more expensive again and that this will give rise to a certain ‘imported inflation’”, The report warned about the economic situation in the neighboring country and the corrective measures applied by the president Javier Milei.
The correction of the exchange rate delay
Looking to the future, another aspect to take into account is that of exchange delay and the consensus between leaders of different political parties, along with the demand of different sectors, about the objective of recovering the real exchange rate from next year.
“Just as its decline contributes to lower inflation, its rise contributes to a higher one,” they warned from the UCU when anticipating measures to appreciate the US currency, which accumulates a delay of close to 15% with respect to its fundamentals, according to data from the BCU.
Finally, the study mentioned “the maintenance of indexing”, considering that this effect “tends to feed back the inflationary process.”
Source: Ambito
