Venezuela Consumer Prices Rise Less Than Expected
Venezuelan consumer prices rose less than expected last month as the government kept a lid on food and housing rental costs.
Consumer prices rose 1.3 percent in November from the previous month, according to the central bank’s benchmark Caracas price index, trailing the 2 percent median estimate of eight economists in a Bloomberg survey. Annual inflation in Caracas rose 26.9 percent from 27.6 percent in October, the bank said.
Inflation may surge in the final month of the year after heavy rains caused crop destruction that will aggravate shortages and increase prices, said Alejandro Grisanti, Latin America analyst for Barclays Capital. President Hugo Chavez approved 10 billion bolivars ($2.33 billion) for spending in relief efforts that will increase the amount of bolivars in circulation against international reserves.
“In the next three to six months, there will be a rise in inflation principally because of the rains,” said Grisanti. “The rains have severely affected the production of vegetables and meat and this is going to put pressure on prices in the next few months.”
The monetary base rose 5.2 percent since Nov. 12 to a record 275.5 billion bolivars, according to the central bank. U.S. dollar reserves have fallen 21 percent this year to $27.7 billion after the bank transferred $7 billion to an off-budget government development fund.
The government may import tomatoes, onions and other vegetables from neighboring Colombia due to the damage from rains, Vice President Elias Jaua said on Dec. 1.
Food inflation slowed to 0.9 percent in November from 1.9 percent in October, the central bank said. Housing rental prices rose 0.4 percent from 1.0 percent.
Venezuela’s government in November raised the price of corn flour and rice by as much as 24 percent for the first time since March in a bid to avoid food shortages.
At least 32 people have died and 25,000 families are being sheltered in government shelters from the rains that prompted Chavez to declare a state of emergency in the capital, Caracas, and seven states. Chavez has also promised to use 24.4 million bolivars to pay out Christmas bonuses to the affected.
Monthly inflation as measured by the central bank’s national consumer price index was 1.5 percent in November, the bank said today in an e-mailed statement. Annual prices rose 27.0 percent throughout the country.
Venezuela, which has the highest annual inflation rate of 78 economies tracked by Bloomberg, is seeking to slow price gains to a single-digit by 2013, Central Bank President Nelson Merentes said on Nov. 3.
Venezuela, a net importer of food, is also paying higher international prices. Global food prices rose 3.7 percent in November to the highest since July 2008, according to the UN Food and Agriculture Organization based in Rome.
“The government might accelerate the imports in coming months due to the rains, but it’s not easy to import all of the food needed,” said Juan Pablo Fuentes, a Latin America economist at Moody’s Analytics Inc. in West Chester, Pennsylvania.