Venezuelan prices surge to 7-year high on food hikes
Saturday, May 8th, 2010| By Daniel Cancel and Corina Rodriguez Pons
CARACAS, Venezuela (Bloomberg) — Venezuelan consumer prices surged the most in seven years in April after the government raised price caps on basic foods and bolivar fell to record lows in the unregulated currency market. Consumer prices rose 5.2 percent in April from March, according to the central bank’s benchmark Caracas price index, released on Friday, more than double the 2.5 percent median forecast of three economists surveyed by Bloomberg. Annual inflation accelerated to 31.9 percent, the bank said. Venezuela, the largest oil producer in South America and a net food importer, is easing price controls after shortages of basic goods including sugar and beef worsened since President Hugo Chavez devalued the bolivar by as much as 50 percent Jan. 8 in an attempt to stimulate production and exports. Prices surged the most last month since February 2003, when the OPEC nation emerged from a two-month oil strike that paralyzed the economy. “That’s an incredible surge,” Adrian Aguirre, an economist at Caracas-based Bancaribe SA, said in a telephone interview. “The fact that food prices rose by more than 11 percent is something we’ve never seen in the last decade.” In January, Chavez created a multi-tiered exchange system under which importers pay 2.6 bolivars per dollar for essential items and 4.3 bolivars for products deemed non-essential. In April, the bolivar averaged 7.3 per dollar in the parallel market, increasing the final prices of goods on shelves. Venezuelan companies and individuals turn to the parallel market when they can’t get government approval to buy dollars at the official rates. Prices for imported goods have surged this year, said Juan Pablo Fuentes, an economist at Moody’s Economy.com. “The government will struggle to bolster the currency to below 6.5 per dollar this year which will keep inflation between 2 and 3 percent each month,” Fuentes said in a phone interview from West Chester, Pennsylvania. Monthly inflation, as measured by the central bank’s national price index, also rose 5.2 percent in April, the highest monthly rise on record since the index was created in 2008. Annual inflation surged to 30.4 percent. Food and non-alcoholic beverages led the price gains in the national index last month, surging 11.1 percent. Venezuela has the highest inflation rate of 78 economies tracked by Bloomberg.(Caribnet) |
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