Inflation accelerates in May from April

Latest reading: Consumer prices were up 3.8% in annual terms in May, following a 3.2% increase in the prior month. Despite rising for the second consecutive month from March's nearly 70-year low, inflation remains below the midpoint of the Central Bank's 3.0–6.0% target and tepid by the country's historical standards. Relative to the prior month's figures, there were higher price pressures for food and non-alcoholic beverages (+2.2% in annual terms vs +1.6% in April), housing (+5.0% vs +4.5% in April) and transportation (+4.5% vs +1.0% in April). In contrast, price pressures reduced for clothing and footwear in May (-4.9% vs -4.7% in April). The main contributor to this month's increase were rising transport costs, driven by higher fuel prices due to the Iran conflict. That said, Uruguay generates almost all of its electricity via renewables, limiting impact of the Iran energy shock on inflation. Finally, consumer prices were up 0.70% in May on a month-on-month basis, following a 0.54% increase in the prior month.

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