Venezuela: Inflation continues to fall in March
April 6, 2012
In March, the consumer price index for the Caracas Metropolitan Region rose 0.99% over the previous month, which virtually mirrored the 1.00% increase seen in February. The March print represented the lowest monthly gain since July 2007. As a result of the relatively softer increase, annual headline inflation stepped down from 24.8% in February to 24.2% in March, thus marking an 11-month low. Meanwhile, the core inflation index, which excludes volatile items such as fresh food, oil and other goods subject to government price controls, rose by 1.47% in March, which was up from the 1.23% seen in February. Despite the monthly rise, annual core inflation declined from 25.6% in February to 23.9% in March. Meanwhile, the government has recently expanded price controls to a new 19 types of products, in a measure aimed at containing inflationary pressures. Simultaneously, on 7 April, President Hugo Chavez announced a 32.25% minimum wage increase for this year. The rise will take place in two stages. A 15% rise will be made on 1 May, coinciding with the International Workers' Day, while the remaining increase will take place on 1 September. The minimum wage increase will come ahead of the 7 October presidential elections and it will barely compensate for the rise in consumer prices expected for this year. According to the 2012 budget, the Venezuelan government expects that inflation will fall to between 20% and 22% this year.