Venezuela: Inflation bucks downward trend in December
January 7, 2011
In December, the consumer price index for the Caracas Metropolitan Region added 1.67% over the previous month, which represented the highest monthly price hike since June. As a result of the strong price increase, annual inflation rose from 26.9% to 27.4%, breaking for the first time the downward trend in place since June. The monthly price rise was mostly driven by higher prices for food and non-alcoholic beverages (+2.37% month-on-month). The core inflation index, which excludes volatile items such as fresh food, oil, and other goods where the government exercises price controls, rose a softer 1.79% over the previous month, maintaining annual core inflation at 29.3%. Rising food prices pushed inflation higher throughout most of last year, and are expected to continue doing so in the first months of 2011, as the government recently eliminated the preferential exchange rate used for food imports. However, the Chavez administration stated that orders submitted before 31 December would still be settled at 2.60 VEF per USD, which should drag out the impact on food prices over the next months.