[Marxism] Re: Inflation in VZLA

[Greg McDonald <sabocat59@xxxxxxx>]

Venezuela Consumer Prices Unexpectedly Fell in March (Update3)
By Guillermo Parra-Bernal and Theresa Bradley

April 2 (Bloomberg) -- Venezuelan consumer prices had their biggest  
monthly decline since at least 1990 in March after the government  
slashed the value-added tax on all consumer goods.

Consumer prices fell 0.7 percent last month, the central bank said  
today in an e-mailed statement. Only one of 12 economists surveyed by  
Bloomberg predicted a drop in prices. In February, prices rose 1.4  
percent.

``In the short term, we're going to start to quickly see a decrease  
in inflationary pressures,'' Armando Leon, a central bank director,  
told reporters in Caracas today. He predicted inflation will continue  
to slow during the second quarter.

The government cut the value-added tax rate to 11 percent from 14  
percent on March 1 to help ease a surge in consumer prices triggered  
by shortages of goods from foodstuffs to car parts. Economists such  
as Tania Reif of Citigroup Inc. said the effect of the tax reduction  
will be temporary and that a growing economy and restrictions on  
foreign exchange trading may push up inflation again in a few months.

Inflation for the 12 months through March slowed to 18.5 percent from  
20.4 percent in February, compared with the 20.1 percent median  
estimate in the survey. Venezuela, where inflation has topped 10  
percent a year since 1986, has the fastest pace of consumer price  
increases in Latin America.

``The behavior of the price index reflects the impact of the series  
of tax measures taken by the government last month, as well as recent  
adjustment in some regulated prices and the substantial improvement  
in the supply'' of certain consumer goods, the central bank said the  
statement.

Chavez

President Hugo Chavez said tonight in Caracas that a plan to  
redenominate the currency may consolidate gains in the fight against  
inflation. The government will lop off three zeros from the bolivar  
and launch the ``bolivar fuerte'' by the start of 2008, as part of a  
plan to boost purchasing power in the oil-rich nation.

The inflation result ``deserves some applause in recognition of the  
integrated anti-inflation policies we've had,'' he said.

Food prices fell 4.7 percent in March, the bank said.  
Telecommunications prices, including cell phone fares, dropped 2.6  
percent and the cost of transportation fell 0.3 percent.

The currency remained unchanged in parallel, unregulated trading. The  
bolivar stood at 3,650 per dollar from Friday, traders said.

Under restrictions that President Hugo Chavez imposed in February  
2003, foreign-currency trading outside the government channel is  
prohibited. The government is the only entity authorized to buy and  
sell currency with individuals, companies and banks.

To contact the reporters on this story: Guillermo Parra-Bernal in  
Caracas at gparra@xxxxxxxxxxxxx

Last Updated: April 2, 2007 18:18 EDT



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