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Across much of Latin America, inflation is the top issue

In 2008, Venezuela's inflation rate is projected to be 25 percent – second only to Zimbabwe's.

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Manuel Sutherland, coordinator of the Latin American Association of Marxist Economists, says that the price of food and the scarcity of some products is one reason voters rejected a sweeping referendum in December that would have, among other things, abolished presidential term limits. "Many people associated the socialist changes in the reforms with the scarcity of food, with the queues," Mr. Sutherland says.

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He blames a lack of economic activity amid higher demand, and private-sector hoarding of food to influence politics and prices. Teodoro Petkoff, founder of Tal Cual, a newspaper that is critical of Chávez, agrees that oil-driven public spending has increased demand for goods, but says that price controls have aggravated the problem.

The factors influencing inflation are country-specific, and solutions are debated among economists. But Jerry Haar, a professor at Florida International University and coauthor of the new book "Can Latin America Compete?" says it's no coincidence that the countries with the highest inflations are the same left-leaning countries – Argentina, Venezuela, Nicaragua, and Bolivia – with high public spending and price controls.

Rosendo Fraga, a political analyst in Buenos Aires, draws a comparison between agricultural powerhouse Argentina and oil-rich Venezuela. Though global spikes in oil and agricultural commodities have been a boon for the petroleum belt of Venezuela and the soybean farms of Argentina, the two fast-growing economies have the region's highest inflation rates. That, says Mr. Fraga, is responsible for the drop in support for both presidents.

'Hemisphere's biggest challenge'

But the impact is more far-reaching. Luis Alberto Moreno, head of the Inter-American Development Bank, told the Miami Herald recently that inflation is "perhaps the biggest challenge in the hemisphere for countries today."

Nicaragua, which is one of the hardest-hit nations with an inflation rate of 17 percent last year – held a food summit early this month. President Daniel Ortega blamed the crisis on the US and the "tyranny of global capitalism." Venezuela and its allies pledged to create a $100 million food fund.

For now, many countries have, like Argentina, relied on a patchwork of price controls that some embrace and others call "Band-Aid" approaches. President Evo Morales in Bolivia, which reported an annual rate of 11.7 percent in 2007, temporarily prohibited exports of cooking oil last month.

But Napoleon Pacheco, an economist at the Fundacion Milenio in La Paz, Bolivia, says such measures have failed – and the hardest-hit are the poor. "Inflation has the biggest impact on those with limited resources," says Mr. Pacheco. "In surveys the decreased power of salaries is voters' biggest worry."

Charlie Devereux contributed to this report from Caracas, Venezuela.

Inflation in Latin America

Venezuela's inflation is projected to increase to 25.7 percent for 2008 – making it second only to Zimbabwe's. Other forecasts for this year:

Global inflation: 5.5 percent

Venezuela: 25.7 percent

Bolivia: 15.1 percent

Nicaragua: 13.8 percent

Argentina: 9.2 percent

Source: International Monetary Fund, World Economic Outlook Database, April 2008. Research by Leigh Montgomery.