Post by scumbuster on Jan 25, 2021 6:50:51 GMT -5
Hyperinflation in Venezuela Gains Momentum, May Close 2021 Around 2,000%
CARACAS – After showing some signs of improvement in December, hyperinflation in Venezuela started to gain momentum early this month. An unexpected increase in the pace of consumer prices has caught most of the population off guard as they have spent every single bolivar – or dollar – left in their pockets on food and other essential items with hopes that things would get a little better this year.
“This year has kicked off with a clear inflationary trend,” said José Guerra, an economist and head of the Food Basket Observatory overseen by the once opposition-dominated Legislature (aka National Assembly or AN). “January is commonly a slow month regarding inflation, but now we realize it is stepping up the pace even when compared with an inflationary month such as December, which means inflation is gaining momentum again fueled by the devaluation of the bolivar.”
Guerra claims that the average variation of the food basket price was located nearly 37% from December 21 to January 16, triggered by a 50.4% increase in the exchange rate of the US greenback. “It is quite likely that over the coming weeks the market will be incorporating the effects of the depreciation of the bolívar seen during the first two weeks of January,” he pointed out.
The remarks of Guerra are in line with data by Venezuela-based consultancy firm Econoanalitica by showing that the first week of January registered inflation of 20%, the same figure as the one registered in December of last year. “This is telling you that inflation will be strongly conditioned by the expectations of a depreciation of the exchange rate,” said Asdrúbal Oliveros, also an economist and director of Ecoanalítica.
The dollar rose by more than half a million bolívars during the first fifteen days of this year, which represents an increase of 57% in only a fortnight and, in a country whose economy moves in dollars, any price adjustment will immediately translate into the prices expressed in bolívars of most products and services, a situation that heavily affects the majority of Venezuelans whose fixed monthly incomes are not paid in dollars.
Ecoanalítica forecasts inflation to be located between 1,200% and 1,500% this year.
Nonetheless, the outlook of another local consultancy firm is far above those figures and, sadly, less optimistic. Síntesis Financiera expects 2021 to close with an inflation rate of about 2,000%, slightly lower than their previous estimate for 2020 of 2,300%.
Tamara Herrera, head of Síntesis Financiera, said 2021 will be similar to 2020 with respect to high inflation rates throughout the year. “The start of this year is similar to the start of 2020: with a dollar that temporarily shoots higher, driving the inflation of the month between 30-40%,” Herrera concluded.
www.laht.com/article.asp?ArticleId=2498468&CategoryId=10717
CARACAS – After showing some signs of improvement in December, hyperinflation in Venezuela started to gain momentum early this month. An unexpected increase in the pace of consumer prices has caught most of the population off guard as they have spent every single bolivar – or dollar – left in their pockets on food and other essential items with hopes that things would get a little better this year.
“This year has kicked off with a clear inflationary trend,” said José Guerra, an economist and head of the Food Basket Observatory overseen by the once opposition-dominated Legislature (aka National Assembly or AN). “January is commonly a slow month regarding inflation, but now we realize it is stepping up the pace even when compared with an inflationary month such as December, which means inflation is gaining momentum again fueled by the devaluation of the bolivar.”
Guerra claims that the average variation of the food basket price was located nearly 37% from December 21 to January 16, triggered by a 50.4% increase in the exchange rate of the US greenback. “It is quite likely that over the coming weeks the market will be incorporating the effects of the depreciation of the bolívar seen during the first two weeks of January,” he pointed out.
The remarks of Guerra are in line with data by Venezuela-based consultancy firm Econoanalitica by showing that the first week of January registered inflation of 20%, the same figure as the one registered in December of last year. “This is telling you that inflation will be strongly conditioned by the expectations of a depreciation of the exchange rate,” said Asdrúbal Oliveros, also an economist and director of Ecoanalítica.
The dollar rose by more than half a million bolívars during the first fifteen days of this year, which represents an increase of 57% in only a fortnight and, in a country whose economy moves in dollars, any price adjustment will immediately translate into the prices expressed in bolívars of most products and services, a situation that heavily affects the majority of Venezuelans whose fixed monthly incomes are not paid in dollars.
Ecoanalítica forecasts inflation to be located between 1,200% and 1,500% this year.
Nonetheless, the outlook of another local consultancy firm is far above those figures and, sadly, less optimistic. Síntesis Financiera expects 2021 to close with an inflation rate of about 2,000%, slightly lower than their previous estimate for 2020 of 2,300%.
Tamara Herrera, head of Síntesis Financiera, said 2021 will be similar to 2020 with respect to high inflation rates throughout the year. “The start of this year is similar to the start of 2020: with a dollar that temporarily shoots higher, driving the inflation of the month between 30-40%,” Herrera concluded.
www.laht.com/article.asp?ArticleId=2498468&CategoryId=10717