(Recasts, adds background)
CARACAS, April 8 Venezuela raised its annual
inflation target to 19.5 percent on Tuesday, the latest sign
the government has taken a dose of reality in its fight to
contain Latin America's fastest consumer price rises.
Planning Minister Haiman El Troudi raised the target from
an earlier goal of 11 percent after revealing that Venezuelan
prices rose more than 7 percent in the first three months of
"The levels of inflation are not what we were aspiring to,"
El Troudi told reporters.
Last year, oil-flush Venezuela refused to raise its
inflation goal above 12 percent, even as prices surged by 22.5
percent, driven by high government spending in the midst of a
fast growing economy.
President Hugo Chavez has spent record income from high
oil prices on subsidized food programs and infrastructure
projects, injecting money into the economy and feeding a major
consumption boom while spurring consumer prices.
Stung by defeat in a referendum on socialist reforms in
December, Chavez reshuffled his economic team to cool economic
His new finance minister Rafael Isea has attacked the
exchange rate, dragging a parallel rate for the bolivar
currency closer to a fixed rate of 2.15 to the dollar, a
strategy some analysts believe may precede a devaluation.
The government has sold hundreds of millions of dollars of
debt this year to soak up excess liquidity stemming from
government largess financed by windfall oil revenues.
That has helped bring down monthly inflation from more than
3 percent in January to 1.7 percent in March. The government
says preliminary figures show economic growth of between 6 and
7 percent in the first three months of the year.
(Reporting by Deisy Buitrago and Frank Jack Daniel; Editing by