UPDATE 1-Venezuela 2010 inflation seen 28-29 pct -cenbank

Wed Sep 8, 2010 5:10pm EDT

* Bank chief says 2010 inflation should be lower

* Inflation election issue (Adds quote)

CARACAS, Sept 8 (Reuters) - Venezuelan consumer prices will rise by 28-29 percent in 2010 and should be 9-10 percentage points lower in 2011, Central Bank president Nelson Merentes said on Wednesday.

The bank reported August inflation of 1.6 percent on Tuesday, with prices up by 19.9 percent this year. Venezuela has one of the world's highest rates of inflation, with double digit price rises the norm since the 1980s.

"We will end the year with less than 30 (percent). Close to 28-29. It's still high, but we are preparing to bring it down steadily. In 2011 it should come down a level, by 9 to 10 points."

The government has released more dollars for food imports in recent months, reducing the scarcity of products such as apples and milk and helping avoid a larger price spike forecast by many economists following a currency devaluation in January.

Along with crime and unemployment, the high cost of living is an issue for the government of President Hugo Chavez ahead of legislative elections on Sept. 26.

The OPEC nation is the only Latin American country expected to be in recession for a second year in 2010.

The economy shrank by 3.5 percent in the first half of the year, but the government predicts it will return to growth by the last quarter.

A recent report from Washington-based think-tank CEPR said the economy may have already emerged from recession, according to its calculations of seasonally adjusted quarter-on-quarter figures.

The central bank does not itself provide quarter-on-quarter numbers in a timely fashion,

(By Patricia Rondon; Writing by Frank Jack Daniel; Editing by Andrew Hay)

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