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The decrease in the monthly price variation rate for July was a result of the deceleration of the controlled items from 1.9% to 0.9%. The non controlled goods and services underwent the same variation of June, as they rose from 1.8% to 1.9%.

According to the Central Bank report, the accumulated variation of the Consumer Price Index (IPC) for the first seven months of 2004 was 12.7%; below the 17.4% registered for the same period in 2003.

According to Domingo Maza Zavala, director of the Central Bank of Venezuela, the expectations for the rest of the year are more favorable. “Naturally, most of this growth is based on the oil business, which should be able to instill dynamism into the other sectors. It is also possible that this year’s construction programs, and the small and medium enterprises, yield good results, All this could contribute to a much greater economic activity than last year’s”, he said.

He also stated that it is nevertheless necessary to keep up, throughout 2005 and 2006, the recovery achieved in 2004; in that case, we could really talk about a new stage in the process of growth in the Venezuelan economy.

The deceleration of the monthly price rate increase of the controlled items was mostly due to the lower increase (from 2.3% to 0.3%) in the food items, and in the non basic services (from 1.9% to 1%). However, there were increases in some services, such as residential garbage collection and enrollment fees in pre-school, elementary and high school education.

Furthermore, the drop in the monthly variation of the overall IPC, is related to the decelerations registered in 10 of the 13 groups of items that constitute the IPC: Communications, from 3.6% to 0.1%; transportation, from 2.5% to 0.9%; Recreation and culture, from 1.2% to 0.2%; Health, from 1.7% to 0.8%; Alcoholic beverages and tobacco, from 0.6% to 0%; Restaurants and hotels, from 1.6% to 1%;education services, from 2% to 1.4%; Food and non alcoholic beverages, from 2.5% to 2%; Various goods and services, from 0.8%to 0.4%; and dress and footwear, from 1.7% to 1.3%.

Home services and Home appliances had greater variations than in the previous month, from 2% to 2.9%, and from 0.4% to 4.3%, respectively.

In general, services as well as goods decelerated in relation to the previous month, the former from 2% to 1.5%, and the latter from 1.6% to 1.3%. For two consecutive months, services have been above goods.

Likewise, general inflation varied 1.2%; below the previous month’s variations in inflation and IPC, 1.5% and 1.4% respectively. Such behavior of the indicator was a result of the deceleration in all of its components, mainly Elaborated food, Textiles and clothing in general. It is important to point out that for two months in a row, the general IPC was above general inflation.

The annual increase of the IPC from July 2003 to July 2004 was 21.8%; lower than the reported 31.9% for the same period between 2002 and 2003.

Published in Quantum No.26