Mérida, August 8th 2012 (Venezuelanalysis.com) – Venezuela’s accumulated inflation for the first seven months of this year stands at 8.6% , down from 16% during the same period last year, and where annual inflation has averaged 26% per year since 1999.
Yesterday Venezuela’s finance minister Jorge Giordani informed that July’s inflation was 1% and the year’s accumulated inflation was 8.6%. Yearly inflation (between June 2011 and July 2012) is 19.4%, down from the highest annual inflation rate over the past three years of 31.3%.
Inflation in July 2011 was 2.7%, and annual inflation in December last year was 27.6%. In 2010, the accumulated inflation rate in the first seven months amounted to 18%, and in 2011 it stood at 16%.
The Venezuelan government had predicted lower inflation rates this year, mostly as a result of it gradually implementing price limits on some products, but Giordani said the results are even below the government’s predictions. The government had based its 2012 budget on a yearly inflation rate of 20 to 22%.
"A one-digit inflation rate has not been reported in Venezuela since 1986," said Nelson Merentes, president of the Central Bank of Venezuela.
However Merentes added that product shortage in July was higher (14.2%) compared to June (11.7%), while the product diversity index declined from 173.2 to 162.8.
Analysing the results, Giordani noticed that the food products with the highest inflation rates were those with reduced supply, such as vegetables. Hence, he concluded, that increased production of such products would help slow down inflation further.
Merentes said the country’s “economic panorama”, with its low unemployment and sustained economic growth (of 5.6% in the first quarter of 2012) meant he could project that inflation would continue to decrease in August and September. Elias Eljuri, president of the National Institute of Statistics, also said inflation would likely continue to decrease, due to increased productivity, greater availability of goods and services, and the state’s fight against speculation.
Eljuri also attributed the low inflation to the creation of the National Superintendency of Costs and Prices (Sundecop), which so far this year has applied price limits to 19 types of products, including baby food, juices, hygiene products, and other food products. The National Assembly passed the law of fair costs and prices one year ago.
Merentes said the government was aiming for one digit inflation, and had put together a One Digit Inflation Committee.
“If we achieve one digit [inflation] we’ll be in a better condition to be able to participate in the economic events ahead for us in the geopolitical dynamic of Mercosur [Common Market of the South] as well as with everything that has to do with the political dynamic of Unasur [Union of South America Nations],” Merentes said.
While inflation peaked at 103% in 1996 in Venezuela, its average during the years of Hugo Chavez’s government, between 1999 and 2012, has been 26%.