Venezuelan July inflation, as measured by the national index INPC, came in on the high side of expectations at 2.7%, up from June.
The consumers’ prices for the first seven months of the year now stand at 16%, below the 18% in the same period of 2010, while for the last twelve months inflation has reached 25.1%, the highest in Latin America.
Food and Beverages reported the strongest hike with 4.8%, reflecting the fact that the Government has been gradually liberating some food prices until now heavily subsidized.
Other items showing sharp increases were Restaurants and Hotels up 2.2%, Diverse Goods and Services, 2.1%; Culture and Entertainment up 1.9% and Transportation 1.9%. Housing Services was negative at -0.2% while communications rose only 0.2%.
The fact that food prices recorded the highest increase will have a significant impact on the Venezuelan population, overwhelmingly poor (75%) and who spend 80% of their income in food.
Given that the Government has yet to raise prices on a number of items and that September is typically one of the worst months of the year for the INPC, we do not foresee any drop in inflation for the coming months said Miguel Octavio, head of research at Caracas investment bank BBO.