Venezuela food prices drop in August ahead of crucial congressional election

Consumer prices rose 1.4% in August from July, according to the central bank’s Caracas price index published Thursday. Annual inflation slowed to 30% the bank said.

Venezuela, a net food importer, is trying to resolve shortages ahead of elections later this month that will determine whether President Hugo Chavez keeps a majority in the National Assembly. Chavez has nationalized assets from Cargill Inc., Gruma SAB and French retailer Casino in a bid to control production and distribution chains.

“The government has been approving a lot of dollars for food imports this year which creates a perception of fewer shortages and greater diversity” said Maikel Bello, an economist at Ecoanalitica in Caracas.

“While gourmet goods are still harder to find, there’s an attempt at resolving shortages because of the effect they have on the government’s popularity.”

Food prices rose 0.9% in August from a month earlier, down from a monthly increase of 12.5% in April. The annual rate of food inflation slowed to 39.5% in August.

The central bank’s shortage indicator, which measures the percentage of goods missing from shelves in metropolitan Caracas, fell to 9.6% in August from 14.5% in May.

Monthly inflation as measured by the central bank’s national consumer price index, which tracks prices across the country, was 1.6% in August, the bank said. Annual inflation was 29.7%.