Uruguay Inflation


Uruguay: Inflation continues to moderate, peso strengthens slightly in October

November 6, 2014

In October, consumer prices rose 0.59% over the previous month, marking a four-month low. October’s print came in below September’s increase (+1.00% month-on-month) and undershot market expectations of a 0.79% rise. According to the Statistical Institute, October’s reading mainly reflected higher prices for food and non-alcoholic beverages, as well as for clothing and for restaurants and hotels.

Annual inflation fell from September’s 8.4% to 8.1% in October, continuing the downward trend that began in February and reaching the lowest level since May 2013. Annual average inflation remained unchanged at September’s 9.0%. Inflation is well above the Central Bank’s target range of between 3.0% and 7.0%. However it is still below the 10.0% ceiling above which labor contracts are entitled to a new round of wage negotiations.

Following a gradual depreciation in September, the Uruguayan peso gained some ground in October, when it traded at 24.0 UYU per USD.

LatinFocus Consensus Forecast participants expect inflation to close the year at 8.6%, which is unchanged from last month’s projection. For 2015, panelists see inflation easing further to 8.2%, which is up 0.1 percentage points from last month’s Consensus. Regarding the exchange rate, the panel expects the peso to trade at 24.6 UYU per USD by the end of this year. For 2015, forecasters surveyed see the peso depreciating to an exchange rate of 26.3 UYU per USD.

Author:, Economist

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Uruguay Inflation Chart

Uruguay Inflation October 2014 2

Note: Annual and monthly variation of consumer price index in %. Expectations of monthly variations of consumer price index in %.
Source: National Statistical Institute (INE) and Uruguay Central Bank (BCU).

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