The January figure is less than the 1.8 percent median forecast of eight economists in a Bloomberg survey. The central bank is expected to release its January consumer price report later today. Prices rose 27.6 percent in 2011, the most among 78 economies tracked by Bloomberg.
While President Hugo Chavez’s government raised spending in January from a year earlier, the central bank and finance ministry reduced inflationary pressures by draining liquidity from the economy, said Francisco Rodriguez, an economist at Bank of America Corp. in New York. The bank increased sales of dollars to importers through the currency market while the ministry began selling bonds in the local market.
“The government did quite a bit to drain some liquidity from the market in January,” said Rodriguez, who forecasts annual inflation will accelerate to 35 percent in 2012.
Government spending rose 25 percent in real terms in January from the same month in 2011, Rodriguez said.
A law being prepared by the government to regulate consumer prices may have also persuaded some companies to not raise prices in January, while the cost of 19 categories of personal care and cleaning products were frozen late last year.
“There are quite a few firms who, because they don’t know what will happen with price controls, don’t want to enact price increases they would normally carry out,” Rodriguez said.
The price law, designed to track thousands of consumer goods, may be milder than expected in order to avoid shortages ahead of presidential elections in October, he said.
During a Feb. 2 speech, Chavez, the 57-year-old socialist leader who has led Venezuela since 1999, threatened to nationalize any firms that raise prices beyond those stipulated in the law.