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Uruguay Inflation May 2024

Uruguay: Inflation increases in May

Inflation rose to 4.1% in May from April’s 3.7%. Looking at the details of the release, prices for food and non-alcoholic beverages plus transport rose at a quicker pace in May. Moreover, prices for clothing and footwear declined at a slower pace.

Meanwhile, annual average inflation fell to 4.5% in May (April: 4.8%).

Finally, consumer prices increased 0.40% from the previous month in May, which was below April’s 0.63% increase.

Our panelists expect price pressures to accelerate by end-2024, exceeding the mid-point of the Central Bank’s target range of 3.0–6.0% in H2. That said, average inflation will decrease in 2024 as a whole from 2023, aided by lower global commodity prices.

EIU analysts commented on risks to the outlook:

“[We] expect inflation to […] close the year at 6%, which is right at the top of the BCU’s 3-6% target range. Our forecasts assume that the next government will maintain prudent fiscal and monetary policies. Risks to our forecast include a spike in global commodity prices (especially for oil), and higher logistics costs caused by geopolitical tensions in the Middle East and Eastern Europe. Another risk to our forecasts is that the next government abandons orthodox fiscal and monetary policies, which would push inflation higher.”

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