Latin America's Double-Digit Inflation Club Gets a New Member

  • Uruguay consumer prices rise at fastest pace in 12 Years
  • Inflation accelerated to 10.23% in February as peso weakens

Uruguay consumer prices rose at the fastest pace in 12 years in February, becoming the latest country in Latin America to see double-digit inflation.

Inflation accelerated to 10.23 percent from 9.68 percent the month before, the national statistics agency said in a report. Price-growth has held above the central bank’s 3 percent to 7 percent target for five straight years.

Brazil, Argentina, Venezuela and now Uruguay have all registered inflation above 10 percent in the past few months, even as their economies weaken. Regional policy makers are struggling to retain credibility in the face of a slump in emerging market currencies and faster inflation. The Uruguayan peso has weakened 7.2 percent so far this year.

We don’t expect policy makers “to tackle effectively the key causes of high inflation in Uruguay, particularly the prevailing system of wage indexation and relatively weak confidence in the monetary policy framework,” Franco Uccelli, an emerging market analyst at JPMorgan Chase & Co., wrote in a note to clients.

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