Venezuela: Headline inflation picks up driven by higher food prices
June 2, 2011
In May, the consumer price index for the Caracas Metropolitan Region rose 2.93% over the previous month, which was well above the 1.31% price increase recorded in April and overshot market expectations that had prices rising 2.38%. The monthly price increase was mainly driven by higher prices for education as well as for food and non-alcoholic beverages. Owing to the strong reading, annual inflation picked up from 23.9% in April to 24.8% in May thus ending the moderating trend in place since March. The core inflation index, which excludes volatile items such as fresh food, oil, and other goods where the government exercises price controls, rose 2.25% over the previous month (April: +1.83% mom). However, despite the monthly spike, annual core inflation moderated from 32.0% in April to 31.6% in May. Inflation remained relatively contained at the outset of 2011 mainly due to existing stocks of imported products at the previous exchange rate and because the government has not allowed controlled prices to reflect the ?de facto? devaluation. However, some analysts consider May's price increase as a signal that inflation will rebound in the months ahead.