Venezuela Inflation


Headline inflation continues to trend up

In July, the consumer price index for the Caracas Metropolitan Region rose 2.50% over the previous month, which was above the 2.22% price increase recorded in June. The monthly price increase was mainly driven by higher prices for food and non-alcoholic beverages as well as for restaurants and hotels. Annual inflation picked up from 25.1% in June to 26.1% in July, which represented a four-month high. The core inflation index, which excludes volatile items such as fresh food, oil, and other goods where the government exercises price controls, rose 1.80% in July over the previous month (June: +1.72% month-on-month). Annual core inflation moderated from 30.5% in June to 30.1% in July. Meanwhile, on 14 July, the government announced a decree-law on ?fair price and costs?, which aims to control rampant inflation. According to the new law, a new agency will establish a national registry of production costs for different products and thus determine the profit margin for companies. Some analysts consider that the new law may result in further product scarcity. Venezuela's Central Bank and the government have set an inflation target of between 22% and 25% for 2011.

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