Venezuela's almost 400 percent inflation rate over the past three months has eroded the "slow and fragile" recovery of the country's economy – which had been collapsed by the policies of its President Nicolas Maduro.
According to a Bloomberg report, the country's 359 percent inflation for the past three months is well down from the wildest hyper-inflationary high of recent years. It mentioned that the country once reached a record high inflation of around 300,000 percent in 2019.
Venezuela has had the highest inflation rate in the world in recent years, even soaring to just less than one million percent in May for the first time since 2018. In fact, prices in Venezuela have changed so rapidly that stores stopped putting price tags on their merchandise and instructed customers to simply ask employees what each item costs that day.
The media portal pointed to the country's government loosening of the purse strings again and shelling out cash for everything from holiday bonuses to handouts for socialist party loyalists as one of the probable causes of the inflation resurgence. The additional cash in the economy is fueling declines in the Venezuelan bolivar's value against the dollar. Hence, consumer prices are soaring.
"Venezuela has technically exited from hyperinflation, but it's locked in high monthly inflation rates," Metropolitan University economics professor Daniel Cadenas said. "We won't see less than 100 percent annualized inflation unless there is a change in economic policy."
Meanwhile, analysts are saying that the surge in prices is also beginning to evoke migration goals among Venezuelans again, though the wave had just begun to ease. Cadenas remarked that Venezuela "has Dubai-like prices for products while people are paid Sudan-like salaries." This, he added, affects mostly the poor – which comprise 93 percent of Venezuela's population.
He also explained that the pain of diminishing purchasing power is one of the reasons people are being forced to migrate. According to United Nations estimates, more than seven million Venezuelans have already left the country in recent years, with tens of thousands showing up at the U.S. border this year.
Moreover, a Department of Homeland Security report published last month indicated that the Venezuelan government has been emptying its overcrowded prisons and releasing many convicted criminals, who are heading for the wide-open U.S.-Mexico border. (Related: Venezuela emptying prisons, CRIMINALS blending in with migrants trying to cross US border.)
Maduro regime trying to hide Venezuela's consumer prices data
According to reports, the Maduro administration's policies allowed the country to rise above hyperinflation in January after a central bank increased the dollar supply in the official exchange market. The said strategy yielded some results at the beginning of the year, with monthly inflation moderating in March. The government also ordered an increase in oil production.
The International Monetary Fund (IMF) predicted that gross domestic product (GDP) will expand six percent this year, which could be the biggest expansion in 15 years.
"A persecuted, tortured, sanctioned and blockaded country has found a path by using its own engines to activate the real economy," Maduro boasted last week while referring to the sanctions placed by the United States.
However, price increases have continued to accelerate recently, with the central bank reporting that consumer prices rose in August. This is the most recent data made available by the Maduro regime.
With Venezuela refusing to publish basic statistics, Bloomberg created its own gauge to measure what the South American nation has been trying to conceal. The news outlet's Cafe con Leche index – based on the price of a cup of coffee in Caracas – put the figure at 158 percent in the past year.
Meanwhile, the Venezuelan bolivar has weakened by a third in the last three months, to around nine bolivars per dollar. An easing of public spending restrictions has led to a "significant" increase in the supply of local currency, which is boosting demand for U.S. dollars, Cadenas said.
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