Venezuela: Inflationary spiral continues at start of 2018
February 12, 2018
The available evidence continues to point to hyperinflation taking place in crisis-hit Venezuela. Although no official inflation data has been released in 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%. The opposition-led National Assembly stated that consumer prices rose a staggering 84.2% over the previous month in January, broadly unchanged from December’s increase. According to the Assembly, annualized inflation came in at an astounding 4,068% in January.
In a sign of the spiraling inflation crisis, the latest Central Bank data revealed that the money supply (M2) soared by an exorbitant 1,121% annually in December (the latest month for which data is available), surpassing November’s 874% increase. In addition, the government raised the minimum wage in January, likely in response to spiraling price pressures. Moreover, the Central Bank’s decision to unify the two-tiered exchange rate system and devalue the DICOM exchange rate in February will likely keep price pressures elevated in the coming months.
Venezuela Inflation Forecast
Panelists participating in the LatinFocus Consensus Forecast project inflation ending 2018 at 4,128% and 2019 at 1,487%.