December 30, 2013 / 4:45 PM / 6 years ago

UPDATE 3-Venezuela says inflation slows, economy grew 1.6 pct in 2013

By Daniel Wallis and Diego Ore

CARACAS, Dec 30 (Reuters) - Venezuela’s annual inflation hit 56.2 percent in 2013, the president said on Monday, but officials said the monthly rate slowed in November and December after the socialist government launched a campaign of forced price cuts.

President Nicolas Maduro kicked off an “economic offensive” last month after the annual inflation rate in October came in at 54.3 percent, ordering the inspection of thousands of businesses accused of inflating prices.

He said the economy grew by an estimated 1.6 percent this year, well short of his administration’s target of 6.0 percent growth and the 5.6 percent rate recorded last year.

The central bank said in a statement on Monday that consumer price rises had slowed to 4.8 percent in November and 2.2 pct in December, compared with 5.1 percent in October.

“This report reveals a stark reality. ... We’ve seen speculative, induced inflation; a speculative bubble touching every economic sector of the country,” Maduro told reporters.

“If we hadn’t acted in time, inflation would have reached 10 percent in November and 15 percent in December, which would have generated chaos and violence.”

Maduro said last month the drastic moves, which included new laws to cap retailers’ profits, would help inflation turn negative in November, a prediction that did not pan out.

Critics and supporters both eagerly awaited the release of the data. November’s figure, which was weeks behind schedule, was released simultaneously with December’s, which was released early.

The central bank is meant to publish the latest consumer price index within the first 10 days of each month. It said the government took “exceptional and historic” steps during the period under review, which had produced “a very positive effect on public opinion, especially among the poor.”

Maduro, who narrowly won a presidential election in April to replace his late mentor, Hugo Chavez, believes inflation and shortages of consumer products are caused by unscrupulous businesses backed by ideological rivals in the United States who want to undermine his leftist administration.


Critics say Venezuela’s high inflation is due to economic mismanagement and the failure of government policies, including a decade of currency controls that were set up by Chavez.

Maduro has made bringing prices down a centerpiece of his presidency, vowing to defeat opposition-linked “speculators” and even sending soldiers to occupy one big electronics retailer that he accused of hiking prices unfairly.

Government sources said central bank officials felt under pressure to come up with a good inflation figure following the “offensive.” But the head of the national statistics institute said November’s rate was published late because the “atypical” measures were being taken into account in the indicators.

The opposition Democratic Unity coalition accused the government of withholding key economic data from the public.

“Venezuela is witnessing a serious and dangerous process of the concealment of vital statistical information needed to analyze the economy,” the opposition said in a statement.

Maduro’s price reduction campaign has so far focused on home appliances, car parts and home hardware items that comprise a relatively small portion of the index compared with weightier day-to-day expenses such as food, transportation and housing.

His “economic offensive” helped the ruling Socialist Party and its allies win the majority of votes at nationwide municipal elections earlier this month.

The opposition says the president’s economic moves punish honest entrepreneurs by forcing them to sell below cost and will only lead to further product shortages in the future.

Government supporters point to social programs such as free health clinics, subsidized groceries and pensions for the elderly, created under Chavez, as examples of social welfare initiatives that benefit the poor and offset inflation.

Monetary liquidity, often a key measure of the total money supply in a country’s economy, grew 70 percent in the 12 months to November as the central bank provided financing to state oil company PDVSA to help it make social expenditures.

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