Venezuela Inflation

Venezuela

Venezuela: Estimates predict inflation above 100%

June 16, 2015

The available evidence points to sky-rocketing inflation in crisis-hit Venezuela. Although no official data has been released this year, market estimates indicate that inflation has worsened from December 2014’s 68.5% (the last month for which official data are available) in recent months. Analysts surveyed by LatinFocus estimate that inflation surpassed 100% in April which, if confirmed, would mark a multi-year high. A sharp drop in the price for oil, which accounts for the vast majority of Venezuela’s dollar income, has aggravated dollar and basic good shortages which is fueling inflationary pressures. On top of this, the government maintains a complex system of exchange rates – with the official pegged at 6.3 VEF per USD and large fuel and electricity subsidies which add pressure on the government’s finances.

Against this backdrop, FocusEconomics Consensus Forecast panelists have raised their inflation forecast for this year for the 13th month in a row. The panel now sees inflation ending the year at 115.7%, which is up 6.3 percentage points from last year’s forecast. For 2016, the panel foresees inflation easing to 84.6%.


Author: Angela Bouzanis, Senior Economist

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