Keep Us Strong WikiLeaks logo

Currently released so far... 51122 / 251,287

Articles

Browse latest releases

Browse by creation date

Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z

Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Browse by classification

Community resources

courage is contagious

Viewing cable 08CARACAS956, INFLATION CONTINUES RELENTLESS MARCH WITH FOOD

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

Understanding cables
Every cable message consists of three parts:
  • The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
  • The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
  • The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
To understand the justification used for the classification of each cable, please use this WikiSource article as reference.

Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #08CARACAS956.
Reference ID Created Released Classification Origin
08CARACAS956 2008-07-09 19:54 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Caracas
VZCZCXYZ0000
PP RUEHWEB

DE RUEHCV #0956 1911954
ZNR UUUUU ZZH
P 091954Z JUL 08
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC PRIORITY 1434
INFO RUEHBO/AMEMBASSY BOGOTA 7819
RUEHLP/AMEMBASSY LA PAZ JUL LIMA 1058
RUEHQT/AMEMBASSY QUITO 2872
RHEHNSC/NSC WASHDC
RUMIAAA/HQ USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE
RUEATRS/DEPT OF TREASURY
UNCLAS CARACAS 000956 
 
SENSITIVE 
SIPDIS 
 
HQ SOUTHCOM ALSO FOR POLAD 
TREASURY FOR MEWENS 
NSC FOR JSHRIER 
COMMERCE FOR 4431/MAC/WH/MCAMERON 
SECSTATE PASS AGRICULTURE ELECTRONICALLY 
 
E.O. 12958: N/A 
TAGS: ECON AMGT ALOW APER AFIN ABUD VE
SUBJECT: INFLATION CONTINUES RELENTLESS MARCH WITH FOOD 
PRICES LEADING THE WAY 
 
REF: A. CARACAS 493 
     B. CARACAS 313 
     C. CARACAS 376 
     D. CARACAS 769 
 
1.  (U) According to the national consumer price index 
(CPI-N) compiled by the Central Bank and the National 
Statistics Institute, inflation for the month of June was 2.4 
percent and reached 15.1 percent for the first half of 2008. 
Annualized inflation (June 2006 to June 2007) topped 32 
percent in Caracas.  (Note:  The CPI-N is a new measure; for 
historical comparisons before January 2008, the Caracas CPI 
must be used (ref A).  End note.)  Food prices continue to be 
a leading driver of inflation:  inflation in the food and 
non-alcoholic beverages category was 19.3 percent for the 
first half of 2008 and reached an astounding 49.6 percent in 
Caracas over the last 12 months.  Other leading drivers of 
inflation were restaurants and hotels (23.1 percent in the 
first half of 2008), transportation (17.5 percent), and 
health (16.6 percent). 
 
2.  (U) Inflation has worsened in 2008 despite BRV attempts 
to reduce it with a more restrictive monetary policy and by 
controlling the parallel foreign exchange rate (ref B and C). 
 These measures have certainly slowed the growth in demand: 
as one economist pointed out, wealthier Venezuelans (and 
foreigners) who have the primary part of their savings (or 
income) in dollars have seen effective local prices rise 150 
percent (i.e., what used to cost the equivalent of USD 1 now 
costs the equivalent of USD 2.5) from November 2007 through 
June 2008, taking into account inflation and the fall in the 
parallel rate.  Nevertheless, the government's measures have 
not yet slowed inflation for several reasons.  Inflationary 
expectations have been fueled by President Chavez' recent 
announcements of 30 percent hikes in the minimum wage, in 
most public-sector salaries, and in military salaries; there 
is also a widely held expectation that fiscal spending will 
increase in the run-up to the November regional elections. 
Other reasons the BRV's measures have not slowed inflation to 
date include poor incentives to invest in increased local 
production and the BRV's intermittent raising of prices of 
price-controlled goods (or, in some cases, lifting the 
controls altogether) to reduce shortages. 
 
3.  (SBU) Comment:  As noted in refs B and D, inflation is a 
key political issue given the fact that many Venezuelans, and 
especially poor Venezuelans (i.e., Chavez' political base), 
are feeling their real purchasing power start to decline. 
Food prices are of special concern to the BRV given the 
importance of food in the consumption basket of poor 
Venezuelans.  President Chavez and his cabinet, including new 
Minister of Finance Ali Rodriguez, have claimed that 
increasing domestic food production is a top priority, but to 
date BRV policies have certainly failed in containing food 
prices.  End comment. 
DUDDY