Venezuela: Inflation eases to near two-year low in December amid rapid dollarization of the economy
February 4, 2020
National consumer prices rose 31.5% from the previous month in December, up from November’s 25.7% month-on-month increase, according to data released by the Central Bank of Venezuela (BCV) on 4 February. Despite the acceleration, the economy seemingly escaped hyperinflation in the fourth quarter of last year—as defined by monthly price increases of over 50%. December’s pick-up reflected faster price increases for food and non-alcoholic beverages, alcoholic beverages and tobacco, and restaurants and hotels.
Inflation receded to 9,585% in December (November: 14,291%), marking the lowest print since May 2018. In addition to aggressively tightening the amount of bolivars that circulate in the economy, authorities also rolled back stringent price controls and liberalized foreign exchange transactions last year, which, coupled with a rapid dollarization of the economy, have helped quell price pressures. Meanwhile, annual average inflation stood at 19,906%, down from 30,496% in November.
Author: Nicolás J. Aguilar, Economist