Venezuela Inflation Q3 2017


Venezuela: Inflation unabated in Q4

October 31, 2017

Due to the dearth of official data for inflation, different indicators from official and non-official sources are used as proxies to measure the evolution of price levels in the South American country. The turbulent events of the current year such as introduction of higher denomination bills, acute shortages of basic goods suggest that price pressures have ramped up significantly since the last official data from December 2015, which showed that inflation came in at 180.9%.

FocusEconomics Consensus Forecast panelists estimate that inflation rose from 898.0% at the end of Q2 to 1,068% at the end of Q3. Sharp increases in the money supply and a free-falling currency in the parallel market have induced a destructive inflation spiral in the economy with devastating consequences on the population. The latest Central Bank data shows that the money supply rose by 534.4% year-on-year in September, up from 451.5% in August, and marking the thirteenth consecutive triple-digit increase. In the January-to-August period, the money supply has increased by 313.1%, vastly exceeding the 102.2% rise reported in the corresponding period of 2016.

Since January 2017, the opposition-controlled National Assembly has published its own index and inflation data following the government’s decision to stop releasing price data. Adopting the same methodology, the Central Bank used previously, the legislative body’s data from September showed that consumer prices increased 50.6% month-on-month (September: +36.3% mom). The legislative body did not publish cumulative year-to-date terms for October. In September, the latest month for which data is available, consumer prices soared in cumulative year-to-date terms from a 366.4% increase in August to a 536.2% rise in September.

Panelists participating in the LatinFocus Consensus Forecast project inflation ending 2018 at 2,033% and 2018 at 1,158%.

Author: Jean-Philippe Pourcelot, Economist

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