Venezuela: Inflation continues skyrocketing in July
September 10, 2015
The available evidence continues to point to soaring inflation in crisis-hit Venezuela. Although no official data has been released this year, LatinFocus Consensus Forecast panelists estimate that inflation has worsened from December 2014’s 68.5% (the last month for which official data are available) in the first half of 2015. The panel estimates that inflation jumped in July, from June’s 126.4% to 149.0%. If confirmed, July’s result would mark a multi-year high.
Low oil prices, which accounts for the vast majority of Venezuela’s dollar income, has aggravated dollar and basic goods shortages that are fueling inflationary pressures. 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 that adds pressure on the government’s finances and intensifies dollar shortages. LatinFocus Consensus Forecast panelists see inflation remaining elevated in the coming months and expect inflation to end the year at 144.5%, which is up 4.4 percentage points from last year’s forecast. For 2016, the panel foresees inflation easing to 104.3%.