Venezuela: Inflation continues its unchecked ascent
October 6, 2017
Due to the shortage of official data for inflation, different indicators from official and non-official sources are used as proxies to measure the evolution of price levels. The turbulent events of the current year and the preceding one suggest that price pressures have ramped up significantly since the last official data from December 2015, which showed that inflation came in at 180.9%.
FocusEconomics Consensus Forecast panelists estimate that inflation rose from 807.0% at the end of Q2 to 871.6% at the end of Q3. A sharp increase in the money supply and a free-falling currency in the parallel market have induced a destructive inflation spiral in the economy. The latest Central Bank data shows that the money supply rose by 451.5% year-on-year in August, up from 422.5% in July, and marking the thirteenth consecutive triple-digit increase.
Since January 2017, the opposition-controlled National Assembly has published its own index and inflation data following the government’s decision to stop releasing price data. Adopting the same methodology, the Central Bank used previously, the legislative body’s data from September showed that consumer prices increased 36.3% month-on-month (August: +33.8% month-on-month). In cumulative year-to-date terms, consumer prices soared from a 366.4% increase in August to a 536.2% rise in September.
Author: Nihad Ahmed, Economist