Venezuela: Inflation continues to soar; Central Bank delay in releasing economic statistics reinforces analysts' concerns
June 11, 2014
Consumer prices jumped 5.73% over the previous month in May, which was virtually in line with the 5.67% increase tallied in April and marked the largest rise in a year. The print was in line with market expectations. May’s increase mainly reflected higher prices for transportation as well as food and non-alcoholic drinks. Annual inflation slowed from April’s 61.5% to 60.9% in May. The Central Bank did not deliver data for core inflation nor for the scarcity index.
Since November of last year, the Central Bank of Venezuela—once believed to be one of the most reliable institutions in the country—has routinely delayed releases on economic data, including statistics for inflation, the scarcity index, estimates for GDP, balance of payments and external debt. In addition, some relevant fiscal data (such as consolidated public sector figures) have been omitted since 2011. According to the Central Bank’s regulations, inflation data should be published within the first 10 days of each month.
This situation has led many analysts to suspect that the government has increased its pressure on the Central Bank, which would threaten the Bank’s independence and objectivity. Analysts’ suspicions have been partially substantiated by the unusual nature of the Central Bank’s press releases, which contain a strong ideological and pro-government tone rather than that of a technical analysis. Moreover, the Central Bank’s statement that it aims to work on new economic indicators that, “better reflect the economic and social situation of the country,” sparked concerns among analysts that future economic data could understate the country’s spiraling inflation. In light of these developments, a group of economists urged the Central Bank, the Ministry of Finance and the National Statistics Institute to release economic indicators.
Analysts expressed concerns about the continual delay in releasing economic data. As Miguel Carpio, finance manager at Delsur BU points out:
The Central Bank’s opacity complicates the task of economic and financial analysts by reducing their available tools, but also creates problems among investors and the population. The Central Bank is the main body responsible for conducting monetary and exchange rate policies as well as managing the country’s international reserves in order to control inflation. However, the Bank is failing to perform another basic task: publication of macroeconomic data. This calls into question the Bank’s reputation, especially when Venezuela is moving towards a scenario of stagflation. In addition, public opinion is questioning the governing board of the Central Bank and points at it for “manipulating” inflation numbers.