* Annual rate below 20 pct for first time since 2008
* Monthly rate was 1.0 pct, down from 1.4 pct in June
By Eyanir Chinea and Daniel Wallis
CARACAS, Aug 7 Venezuela's annual inflation
slowed for a seventh straight month in July, coming in below 20
percent for the first time in years and giving President Hugo
Chavez a boost as he seeks re-election in October.
Finance Minister Jorge Giordani on Tuesday said annual
inflation to July was 19.4 percent, below the 20 to 22 percent
forecast in the socialist government's budget for this year.
"We have broken, punctured, the 20 percent threshold. ...
This is good news regarding this complex, difficult, historical
problem," Giordani told a news conference.
Monthly inflation slowed to 1.0 percent in July, he said,
lower than the 1.4 percent recorded the previous month and well
under the 2.7 percent rate of July 2011.
It was the first time the OPEC nation's annualized rate had
fallen below 20 percent since 2008, when officials changed how
the figure was calculated.
Venezuela recorded the highest annual inflation in the
Americas last year, at 27.6 percent, and most economists had
predicted it would be higher during 2012 because of a
pre-election spending spree by Chavez's socialist government.
His administration, however, has had some success combating
rises with new price controls in some basic areas, including
food and health, that were put in place at the end of last year.
Economists question whether those controls are a sustainable
solution, saying they might be artificially suppressing a major
inflation spike later in the year.
There are also fears of shortages as some businesses opt not
to sell rather than adhere to the price controls.
Chavez, who has a double-digit lead in most opinion polls
ahead of the election, regularly reminds Venezuelans that high
prices have dogged the nation for several decades.
The president's supporters say headline inflation figures
mask the government's provision of subsidized food for the poor.
Venezuela's average annual inflation rate over the last 25
years has been well over 30 percent, with a peak of 103 percent
in 1996 during the administration of Rafael Caldera.
Slowing inflation and better growth figures are enabling the
government to boast of economic success during an election year,
in contrast with woes in debt-plagued Europe.
Yet experts say Venezuela is heading for an economic
hangover after the election. A third devaluation of the currency
in as many years looks inevitable, while growth levels are
likely to drop as the pre-vote spending spree ends and payments
come due on growing international debt.