July 09, 2008
Venezuelan annual inflation climbed to 32.2 percent in June in metropolitan Caracas as price controls on food prices were eased.
Monthly inflation rose by 2.4 percent, slowing from 3.2 percent in May as price gains for nonalcoholic drinks, restaurants and hotels slowed, the Central Bank said Tuesday.
Independent local analysts predict that annual inflation will slow to 25.5 percent by the year's end, as measures to expedite imports and increase domestic production take effect.
President Hugo Chávez last month introduced a series of economic reforms to boost supply by speeding importers' access to U.S. dollars and creating a $1 billion fund to finance public-private joint projects to increase agricultural, oil and manufacturing output.
He also eliminated a 1.5 percent tax on financial transactions, which has already stalled price gains, said Asdrubal Oliveros, an economist at Ecoanalitica, a Caracas consulting firm.
Still, he warned, demand continues to outpace supply, even as private investment falls.
Prices have continued their upward surge in Venezuela even as growth slowed to a four-year low of 4.8 percent during the first quarter. The government has not yet released second-quarter growth figures. Venezuela's Central Bank adopted a new method of measuring inflation this year, incorporating prices in smaller cities, which are often lower than in the capital.
The government has raised various price caps on basic food items, including corn flour and chicken, to stimulate production and combat sporadic food shortages.
Soaring international food prices will further inflate living costs in Venezuela, Oliveros said.
''We import 55 percent of what we eat, so you can imagine that the increase in international food prices will affect internal prices,'' Oliveros said.