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Inflation
eases moderately
in January as controls remain in place
In
January, consumer prices rose 2.5%, which was up from the 1.8% figure in
the previous month and represented the highest rate observed since
February last year when the currency experienced a strong depreciation
that prompted the current price controls.
Price increases were particularly notable in the categories of food
and non-alcoholic beverages and housing services.
Communications and education services prices, on the other hand,
remained virtually unchanged. Despite
the high January figure, the annual inflation rate dropped from 27.1% in
December to 26.6%.
Next to the slump in domestic demand and the fixed currency, continued
government-imposed price controls have managed to avert an inflationary
surge. Wholesale price developments indicate that inflation may
accelerate at a more rapid pace in the coming months, as businesses appear
to be unable to pass through higher prices to consumers amid the dire
recessionary environment. Wholesale
prices continued to increase at a slightly more rapid rate than consumer
prices in January, confirming the trend observed throughout most of last
year. Wholesale prices rose 2.6%, which was up from the already high 2.5%
and 2.2% observed in December and November of last year respectively.
Nevertheless, the annual rate dropped off from 48.9% in December to
42.5%.
Participants expect devaluation to pass through to domestic prices this
year. As a result, inflation is anticipated to reach 32.5%, which is
well above the government’s 26.0% estimate and 2.7 percentage points
above last month’s Consensus Forecast estimate. Next year, the
Consensus Forecast sees inflation moderating to 24.5%. However, the
current range of forecasts exhibits great divergence with a maximum rate
of 42.6% and a minimum rate of 9.6%.
Venezuela
Oil Price Developments – Oil price begins year at historic high
The Venezuelan oil price reached historic highs in January.
The price has been bolstered notably by the rise in demand from the
United States, where the severe winter weather has provided for extra
demand.
In addition, the inventory levels in the United States are
currently at the lowest levels observed since 1971.
Furthermore, the U.S. Energy Information Administration (EIA)
published a report that indicated that prices may be in for further hikes,
as retail sales of gasoline experienced the biggest increase ever for a
January since the EIA began tracking gasoline price developments.
The EIA claims that the rise in demand for gasoline has come early
and that typically prices spike more notably in spring, indicating that
further upward momentum may emerge.
As a result, the Venezuelan oil price reached a historic US$ 29.30
per barrel on 23 January, following an already historic level of US$ 28.80
per barrel the prior week.
While the oil price did drop off in the final week of January to
end at US$ 27.28 per barrel, the average of US$ 28.16 per barrel for the
Venezuelan oil basket represented a historic high and was even above the
OPEC’s (Organization of the Petroleum Exporting Countries) official
price band of US$ 22 to US$ 28 per barrel for the OPEC reference mix.
OPEC is still undecided on whether to cut production in its Algeria
meeting this month from the current quota of 24.5 million barrels per day
(bpd).
However, further cuts are likely to prompt additional hikes in
prices, which would benefit the Venezuelan basket and could help bolster
the oil economy, which has been in recession since the first quarter of
2001.
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