I am adding this tip about the post office because we could not find anywhere to buy stamps or mail our postcards. The lady at the tourist office even gave us a map with the location marked. Finally after several attempts we were able to find it.
There are several small Super Mercados in Piriapolis and one extra large one similar to a super Wal-Mart. That is where we stocked up on water, soda, and wine.
What to pay: Grocery items are not much less expensive than you would expect to pay in the US. Of course, the dollar isn't worth much these days.