The Banco Central de Venezuela finally broke its silence today by releasing inflation statistics for the first time in over three months.
According to the bank, the inflation numbers for the past three months were:
- June: 4.4%
- July: 4.1%
- August: 3.9%
The accumulated inflation since the start of 2014 sits at 39%. The annualized inflation rate – that is, the accumulated inflation over the last 12 months – sits at 63.4%. Over the last 24 months, inflation has increased by 204.6%.
Inflation affects each sector of the economy differently, and some goods and services are impacted more by inflation than others. For example, in August, the inflation rate for food and non-alcoholic beverages was 5.9%, while transportation services and restaurants saw rates of 3.0% and 4.9%, respectively.
While the bank’s publishing of inflation numbers was welcomed by economists and journalists, its failure to reveal scarcity statistics for the sixth straight month leaves many questions regarding the health of the Venezuelan economy unanswered. The last time scarcity numbers were released was back in January, when the bank revealed that the scarcity of goods in the country sat at 28%.
The full report (in Spanish) is available here.
Economist Calls for ~70% Inflation By End of Year, Highest in the World
Economist Jesus Casique estimates that the rate of inflation by at the end of the year might reach between 68% – 70%, which would put Venezuela at the number one spot for highest inflation in the world, an honour which Venezuela currently holds.
Casique blamed government policies going back to 2003 as being directly responsible for the country’s inflation crisis:
In February of 2003, price controls and currency exchange controls came into effect. The objective of the price controls was to combat inflation. Since then, the accumulated inflation up to May [of 2014] is 1.360%. This means that when it comes to inflation, the government has not tackled the root causes, monetary liquidity, which since August of 2013 until August of 2014 has increased by 70%.
U.S. Official: “Carvajal Will Face Justice”
William Brownfield, a U.S. State Department official, said in an interview today that the United States government believes that alleged drug trafficker Hugo Carvajal will eventually face justice.
Brownfield – who currently runs the Bureau of International Narcotics and Law Enforcement Affairs – was speaking on issue of drug trafficking in Latin America in general when he expressed his belief that the ex-Venezuelan general and former head of military intelligence will have his day in court.
Carvajal was arrested and subsequently released earlier this year at the request of the United States government in Aruba.
The inflation numbers released today put an official government seal on what many had feared: the inflation crisis is not getting better. The central bank’s reluctance to release figures over the past three months only served to cause panic, as anxious Venezuelans theorized a conspiracy to hide numbers too shocking to release.
Casique’s assessment of the possible inflation rate by the end of the year appears to hold true in at least one very simple respect: inflation is quite likely going to keep increasing The simple fact is that the government has done essentially nothing to address the inflation crisis this year.
The sacudon might have helped to inspire some confidence in the idea that the economy might turn around, but it proved to be such an anticlimactic and mild game of musical chairs that any notion of things improving in the country before the end of the year is magical thinking.
If no measures are taken to steer the ship away from the rocks, the ship will smash into the rocks.