Inflation Continues To Rise despite Economic Stagnation

Consumer price inflation in Venezuela climbed 2% in May compared to 1.8% in April, the Central Bank of Venezuela has reported. Inflation continued on an upwards path despite economic growth falling to 0.3% in the first quarter - the lowest level for five years. We believe this rise in inflation represents a return to the longer-term uptrend and are sticking with our end-2009 target of 40.0%. Indeed, the current conditions are turning increasingly ripe for a hyperinflationary bust and we are revising our end-2010 forecast from 31.0% to 50.0%. A dramatic jump in inflation could have serious implications for the

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