Venezuela: Inflation falls in annual terms in May
National consumer prices rose 28.5% from the previous month in May, up from April’s 24.6% month-on-month increase, according to data released by the Central Bank of Venezuela (BCV). The uptick was driven by a broad-based increase in price pressures, with prices in key subindices such as food, housing and healthcare all rising at a faster pace compared with the month prior.
On an annual basis, inflation dropped to 2,719% in May, easing slightly from the 2,941% print in April and marking the second consecutive month of falling inflation. Nevertheless, May’s reading was likely amplified somewhat by a low base effect due to the pacifying effect that the Covid-19 pandemic had on price pressures in the same month a year prior. Meanwhile, annual average inflation stood at 2,731%, creeping up marginally from 2,729% in April.
Looking ahead, inflation is projected to ease gradually throughout the rest of the year and into 2022, although it will nevertheless remain significantly elevated compared to regional peers. The continued dollarization of the economy should counterbalance the inflationary impact from the unrelenting depreciation of the bolivar and elevated money supply. Meanwhile, focus remains on the Biden administration’s approach to U.S. sanctions on Venezuela, with any alleviation of the Trump-era “maximum pressure” campaign likely to see an uptick in exports and an easing of import disruptions.