Uruguay Sees Price Cuts, Freeze Slowing Inflation by Year-End

Uruguay’s government sees inflation slowing to less than 8.5 percent by the end of this year, Andres Masoller, head of the Economy Ministry’s macroeconomic department, said today.

While November’s 0.35 percent rise in consumer prices, which took the year-on-year rate to 9.03 percent, was higher than expected, the government expects to close the year with inflation “closer to 8 percent than to 9 percent,” Masoller said at a business forum in Montevideo.

In October, Uruguay’s government reached an accord with retailers to reduce the price of a basket of 200 goods by 10 percent and freeze those of other items.

“There is a delay in seeing the effects,” Masoller said. “We believe the country is moving toward slower inflation in coming months.”

The Economy Ministry doesn’t rule out further measures to rein in price increases, Masoller added.

On Sept. 28, the central bank increased its benchmark interest rate as solid domestic demand and rising global commodity prices convinced policy makers that inflation could quicken.

The bank’s five-member policy committee is due to meet again by the end of this month.

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