Venezuela: Inflation nears 200% in December
January 15, 2016
Although no official GDP data has been released for 2014 or 2015 and there is no official inflation data for last year, the available evidence continues to point to a deepening economic crisis. The plunge in the price of oil, which accounts for about 95% of Venezuela’s exports and half of public revenues, has significantly limited access to foreign currency and is aggravating inflation and creating huge goods shortages. Meanwhile, President Nicolas Maduro has downplayed the crisis, arguing that the economy has been sabotaged by the opposition who are waging in an “economic war” against the government. President Maduro stated in January that annualized inflation up to September reached 142%. This figure was corroborated by a press statement released by the Central Bank of Venezuela (BCV). This was the first time in over a year that the government released data on inflation. Maduro, however, did not comment on future releases of economic indicators by the Central Bank or the National Statistics Institute (INE).
The FocusEconomics panel of analysts has a more pessimistic view of price developments in the country. Our panel estimates that inflation has worsened drastically since September’s 2015’s 142 % and that it soared from November’s 187.1% to 189.7% in December 2015. Inflation has continually spiraled upward in Venezuela as the drop in oil prices is hindering the ability of the government to supply dollars to its complex exchange rate system. Public finances are unlikely to improve as the Venezuelan government has forecast the price per barrel of oil to average USD 40 in 2016 and the barrel of oil dipped to multi-year lows in early January.