Uruguay: Inflation rises in June
July 5, 2018
Consumer prices rose 1.0% from the previous month in June, edging up from May’s 0.8% increase and marking the highest reading in 17 months. The print once again came in above the Central Bank’s expectations of a more moderate 0.7% increase. According to data released by the Statistical Institute, the result was primarily driven by higher prices for food and non-alcoholic beverages, and transport. It came against the backdrop of a weakening peso and adverse weather conditions in recent weeks.
Headline inflation picked up pace for the second consecutive month in June, coming in at a 17-month high of 8.1% (May: 7.2%). As a result, inflation moved further above the Central Bank’s target range of 3.0%–7.0% in June. While higher-than-expected inflation points to the increasing possibility of a policy reaction from the Central Bank of Uruguay, monetary tightening seems unlikely in the short-term, as small deviations from the target range appear to be tolerable.
Lastly, annual average inflation rose to an eight-month high of 6.5% in June (May: 6.2%).
Uruguay Inflation Forecast
Panelists participating in the LatinFocus Consensus Forecast expect inflation to close 2018 at 7.4%, which is up 0.2 percentage points from last month’s projection. For 2019, panelists see inflation moderating marginally and ending the year at 7.2%.
Author: Almanas Stanapedis, Economist