Uruguay Inflation


December inflation marks unexpected drop

In December, consumer prices dropped 0.73% over the previous month, which contrasted the 0.35% increase seen in November and marked, in fact, the largest monthly drop in almost forty years. The reading - which contrasted market expectations of a 0.18% increase - was driven by a drop in the price of housing, largely due to a 19.2% fall in the electricity sub-category amid discounts applied by the state-owned company UTE at the end of the year.

As a result of the monthly drop, annual headline inflation ended the year at 7.5%, which is below the 8.6% recorded at the end of 2011. However, inflation remained above the 1.0 percentage point tolerance margin around the Central Bank's target of 5.0% set by monetary authorities for 2012. Against this backdrop, at its latest meeting on 28 December, the Central Bank raised the monetary policy rate by 25 basis points to 9.25%, marking the second consecutive meeting that the Bank raises interest rates.

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Uruguay Inflation Chart

Uruguay Inflation December 2013

Note: Annual and monthly variation of consumer price index in %.
Source: National Statistical Institute (INE).

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