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Development: On 7 May, Venezuela's energy minister, Rafael Ramírez, said that the government would invest BF60bn (US$14bn) in the construction of 350,000 new homes in 2011-2012, noting that the state is preparing to move to seize urban lands deemed idle.

Significance: To the chagrin of his opponents, President Hugo Chávez is heading into the presidential election with tail wind in the form of a fresh oil price windfall. He remains popular with around 48% of the population, including a large section of loyal low-income voters. His nearest rival for 2012, Henrique Capriles Radonski, the state governor of Miranda, has an approval rating of about 55%, going on two recent polls, but Radonski has his work cut out to: a) become the main opposition candidate; and b) to mount a national challenge against Chávez and his well-oiled and efficient electoral machine.

Key points:

• The Chávez government can afford a pre-electoral spending spree, with treasury coffers given a double injection thanks to a fresh devaluation of the Bolívar in January and the added bonus of soaring oil prices. Chávez last week awarded fat pay increases for mid ranking public sector workers. Ramírez stressed that funding for the housing program is guaranteed (in part thanks to agreements with other countries) and insisted that oil price movements would not affect the scheme. Venezuela's housing deficit is 2.0m homes, requiring some 34,000 hectares of land, according to Ramírez.  In the past 12 years, the Chávez government has only managed an annual average of 35,000 new homes.

• The additional oil dollars flowing into the economy seem to be helping to ease supply pressures, with inflation dipping to 1.5% month-on-month and 22.9% year-on-year in April. 

• Moving forward, however, it may head back up as the government puts its foot on the accelerator for 2012. Moreover, opposition economists say that proposed new presidential decree legislation aimed at capping inflation and ending alleged market speculation  –Ley de Costos, Precios y Protección del Salario,  which would give the state price control over all locally produced goods-  could actually have the reverse effect by acting as a further disincentive to national production. The Chávez administration has imposed an array of price controls and has intervened across a range of designated key sectors, with mixed results.