Venezuela: Inflation continues to skyrocket in May
June 6, 2013
In May, the consumer price index for the Caracas Metropolitan Region jumped 6.15% over the previous month, which was well above the 3.87% increase tallied in April. The print overshot market expectations that had prices rising 1.82% and marks the highest rate seen since the country adopted a new index in 2008. The reading reflects higher prices for most of the categories, in particular for food and non-alcoholic beverages as well as household equipment.
Building on the monthly unprecedented increase, annual headline inflation soared from 27.9% in April to 33.7% in May, which represents the highest level since October 2008. Meanwhile, the core inflation index, which excludes volatile items such as fresh food, oil and other goods subject to government price controls, rose 6.28% over the previous month, up from the 4.08% increase tallied in April. As a result, annual core inflation jumped from 31.0% in April to 36.6% in May, the highest level recorded since September 2009.
According to the Central Bank, the hefty monthly rise was mainly due to a scenario affected by residual effects stemming from the devaluation adopted early this year as well as a wage increase in May. However, analysts warn that the current situation may lead to hyperinflation.
According to the 2013 budget, the Venezuelan government expects inflation to end the year between 14.0% and 16.0%. LatinFocus Consensus Forecast panellists expect consumer prices to rise 31.4% by the end of this year, which is up 1.4 percentage points from last month's forecast. Next year, the panel sees inflation at 26.4%.