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UPDATE 1-Venezuela's 12-month inflation dips to 18.1 pct
* Annualized rate below 20 pct for second straight month
* Price controls helping, but benefits could be temporary
CARACAS, Sept 4 (Reuters) - Venezuela's annual inflation slowed for the eighth consecutive month in August, beating government forecasts for the year and giving President Hugo Chavez respite from concerns over soaring prices ahead of the Oct. 7 presidential election.
Twelve-month inflation to August was 18.1 percent, compared with 19.4 percent in July.
The decrease keeps the rate below the symbolic 20 percent level for the second month in a row and puts the government on track to beat its full-year forecast of 20 to 22 percent.
Last month, when inflation broke the 20-percent barrier for the first time in years, the government seized upon it as proof price controls and other efforts to curb inflation were taking effect.
"We are earning credibility," Finance Minister Jorge Giordani said o n T uesday, dismissing economists who warn that inflation could rebound as "prophets of disaster."
Consumer prices rose 1.1 percent in August, compared with 1.0 percent the previous month, the government said.
The accumulated rise in the first eight months of 2012 was 9.8 percent.
Fueled by heavy government spending on Venezuela's expansive social programs, inflation in 2011 reached 27.6 percent, the highest level in the Americas.
At the time, economists warned that higher spending this year ahead of the upcoming election could push the rate toward 30 percent and raise the risk that Venezuela would need to devalue the bolivar, its currency, for the third time as many years.
Even as he continues to channel abundant oil revenues toward pet projects, however, Chavez has used price controls across the country as a way to curb inflation.
While that has brought temporary relief, economists still warn that price controls have limited effect and warn that a price spike could follow.
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