Venezuela Inflation November 2017

Venezuela

Venezuela: Inflation set to soar in Q4

November 30, 2017

The available evidence continues to point to skyrocketing inflation in crisis-hit Venezuela. Although no official inflation data has been released in nearly two years, indicators from official and non-official sources suggest that inflation has risen astronomically since December 2015—the last month for which official data was available—when it hit 180.9%. FocusEconomics Consensus Forecast panelists estimate that inflation came in at 1,068% at the end of Q3, notably above Q2’s estimate of 898%. The figure would mark a record high if confirmed. Moreover, the collapse of the country’s exchange rate on the black market, sharp increases in the money supply and shortages of basic goods are keeping price pressures extremely elevated. FocusEconomics analysts project inflation will reach 1,474% at the end of Q4.

In a sign of the spiraling inflation crisis, the latest Central Bank data revealed that the money supply (M2) soared by an exorbitant 645.0% annually in October, vastly exceeding September’s 534.4% increase. In the January-to-October period, the money supply has increased 437.9%, notably above the 87.1% rise reported in the corresponding period of 2016.

Similarly, recent data released by the opposition-led National Assembly confirmed soaring price pressures in the country, and the legislative body stated that Venezuela entered a state of hyperinflation in October. According to the National Assembly’s inflation data, cumulative annual inflation reached a staggering 825.7% in October. The result was significantly above September’s cumulative year-to-date result of 536.2%.

Panelists participating in the LatinFocus Consensus Forecast project inflation ending 2018 at 2,687% and 2019 at 1,596%.


Author: Angela Bouzanis, Senior Economist

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