The world's No 5 oil exporter is rebounding from a two-year recession, helped by soaring crude oil prices this year that have enabled increased government spending.
Venezuela's consumer price index rose 1.6 percent in December, compared with 1.8 percent in the same month last year, the central bank said in a statement.
The inflation rate slowed from 1.7 percent in November.
The 12-month result through December was below recent forecasts by government officials who had seen inflation ending the year at 20 percent. It compared with 27.1 percent in 2003.
OPEC producer Venezuela put tough currency curbs and price controls in place on a range of basic goods and services last year to halt capital flight and cap inflation following months of political instability.
President Hugo Chavez's government is hoping to bring inflation down further in 2005 to 15 percent.
This year's surge in economic growth follows sharp contractions of 7.6 percent last year and 8.9 percent in 2002.
This two-year slump was triggered mainly by often violent political conflict over left-winger Chavez's rule, including a brief coup in 2002 followed by an opposition general strike that disrupted oil output and shipments into early 2003.
Political stability has improved since Chavez won a referendum on his government in August, boosting the nation's growth prospects. The government says it expects the economy to grow at least 5 percent in 2005.
Opponents of firebrand populist Chavez accuse his administration of squandering the current oil income bonanza on high-profile health, education and other social programs they say are failing to create new jobs and lasting growth.
The president, who was first elected in 1998, defends his self-styled "revolution" as a crusade to distribute Venezuela's oil wealth more fairly and reverse what he says are decades of neglect of the country's poor by previous governments.