Venezuela's business chambers, Fedecamaras warned that inflation this year will reach 33 to 35%, several points ahead of the latest government estimate, caused mainly because of insufficient production and supply.
Noel Alvarez, Fedecamaras vicepresident said the administration of President Hugo Chavez commits a serious mistake on blaming alleged hoarding and speculation from local manufacturers and farmers for the soaring prices, and in focusing the problem on that specific interpretation. "Our inflation estimates are in the range of 33 to 35%, but with insufficient production there will be no curbing of inflation and this must be understood by government", said Alvarez in an interview with a Caracas broadcasting station. Finance minister Ali Rodriguez admitted that inflation this year in Venezuela will be "very high" in the range of "27%", which means the third time the original estimate has been corrected: from 11% to 19% and now 27%. However Rodriguez insisted that businesses and retailers speculation was to blame for inflation that he accused of not lowering prices in spite of the fact government has significantly reduced taxes and eliminated some levies in an effort to curb inflation. "We're back on the same vicious circle, as has happened with so many governments here and in other countries; this policy inevitably leads us to failure", said Alvarez. He insisted the only way out is to increase domestic production of goods and services, stimulate competition and let supply and demand workout market conditions, "this is how you curb inflation not with coercion and threats". In the first seven months of 2008 inflation in Venezuela accumulated 17.3%. Inflation in 2007 was 22.5%, ten percentage points above the government target.
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