CARACAS, Friday October 11, 2013 | Update

Inflation in Venezuela takes the highest leap in 17 years

Food prices have recorded a 69.9% surge in the last 12 months

Venezuelans are feeling the heat of inflation in items vital for their quality of life (File photo)
Friday October 11, 2013  10:47 AM
Statistics disclosed on Thursday by the Central Bank of Venezuela (BCV) reveal the highest increase in prices over the last 17 years in Venezuela, an unbalance that undermines the purchasing power of most households.

In September, inflation climbed by 4.4%. Over the first nine months, inflation took a leap of 38.7%. The number exceeds the annual inflation rate recorded in the 1997-2012 period.

Inflation in Venezuela is boosted by several factors. The government has printed banknotes through the BCV to meet a part of its expenses. The combination of more bolivars and the same supply products translates into skyrocketing prices.

Another key element is the fact that the Venezuelan government was forced to devaluate the official exchange rate from VEB 4.30 per USD to VEB 6.30 per USD, in order to get more bolivars per petrodollar. Hence, the price of imports paid with foreign currency allocated via the Foreign Exchange Administration Commission (Cadivi) climbed.

Venezuelans are feeling the heat of inflation in items that are vital for their quality of life. In September, food prices grew by 5%, with a 69.9% surge over the last 12 months.


Against a backdrop of price controls that hit companies' profitability and production, and with declining availability of foreign currency for the private sector, shortage of basic staples remains high.

The shortage index disclosed by the BCV stood at 21.2% in September, against 13.7% in September 2012.

Analysts believe that, in order to overcome shortage completely, the government needs to adjust price controls to prevent companies from suffering losses.

Increasing foreign currency sales is also vital to bring the imports' flow back to normal.

The Venezuelan government faces a conundrum: increasing the prices of controlled products before the December 8 local election would entail further inflation; however, failing to do so would translate into higher shortage.

Translated by Andreína Trujillo
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