Venezuela: Inflation drops to 31-month low in September
October 8, 2020
National consumer prices rose 27.9% from the previous month in September, up from August’s 24.7% month-on-month increase and marking the highest print in four months, according to data released by the Central Bank of Venezuela (BCV). The acceleration was primarily driven by rising food and non-alcoholic beverage prices, partly offset by falling transport costs.
Meanwhile, inflation dropped to 1,813% in September from 2,177 in August, marking the lowest print since February 2018. A high base effect from 2019’s period of hyperinflation, as well as the increasing use of USD in everyday transactions and April’s enaction of government price controls, is helping subdue price pressures somewhat. Meanwhile, annual average inflation stood at 2,346%, down from 2,592% in August.
Looking ahead, inflation is expected to accelerate. Acute gasoline shortages are set to affect other areas of the economy, while the continued and marked depreciation in the bolivar will further stoke price pressures. However, price controls and the dollarization of the economy should cap upside moves and help reduce inflationary pressures in 2021.
Author: Stephen Vogado, Economist