Venezuela Has The Highest Inflation In The World

inflation

In the last year Venezuelans saw a 56.3% increase in prices.

The Central Bank of Venezuela (BCV ) unveiled Tuesday the scarcity index, which measures the total absence of assets and the inability to replace the equivalent of another brand in 2014. The report revealed the low supply of all goods in the domestic market. The index showed a total of 28%, the highest figure since the agency began to show that indicator, which confirmed an increase of 5.8% compared to the number announced in December.

Until then, the highest number was recorded in 2008 when the Central Bank announced a shortage of 24.7%. This index is obtained after averaging the record of all the items that make part of it.

Despite the situation, the agency has established an optimistic analysis in the press release explaining the results. “In basic foods, the result was 26.2%, which represents a better supply of these items compared with the month of December ( 28.3%).

In January, the level of scarcity was determined by the low availability of vehicles, motorcycles and others who that are not associated with the essential needs of the Venezuelan people. “In the case of food, it means that in 26 out of every 100 establishments visited, Venezuelans do not find staple items. Inflation meanwhile registered a monthly variation of 3.3%, the highest in the world. In the last year Venezuelans saw a 56.3% increase in prices.

The Venezuelan Automotive Chamber said last week that in the first month of the year the vehicle assembly had fallen 84% over last January. Yesterday the long queues in front of a motorcycle dealership in the south bank of the river Guaire in Caracas, circled a block, while a truck full of new motorcycles awaited to deliver them to expectant customers.

The limited supply of goods is due to the supply crunch. In January, as recalled by the newspaper El Universal, the government $1 billon with preferential conditions- at Bs 6.30 – less than a year ago, and suspended foreign exchange auctions convened in late January.

Venezuela, which imports almost everything it consumes, is living with the few stocks that remain in the private sector and public imports. Entrepreneurship refuses to bring merchandise in because of fears about the impact of the implementation of the Organic Law of Fair Prices – established profit margins of 30 % – in its cost structure and the wide margin the government has to  apply it.

All these companies face setbacks that do not seem to worry the BCV. “The population continues receiving what they need, with equal or greater intensity, the benefits provided by the state across the country, through the system of public marketing, where you can buy basic food at affordable prices”, explained the press release distributed on Tuesday.

Although BCV maintains a technical payroll that according to experts is not contaminated by political whims, the board has lost the autonomy it had in the past. The Reform Act of the Central Bank of Venezuela that passed in 2005 and established the concept of optimal reserves, resulted in the Executive deciding what to do with all dollars entering the national coffers when they exceed the cap amount. This process initiated the dominance that the party has over the agency.

The government says that the jump in the National Consumer Price Index, as it is known, is due to an “economic war ” initiated by the “parasitic bourgeoisie”. The Central Bank warns that the vast majority of the items -9 of a total of 13 – are below the monthly indicator.

About this result, the agency adds that: “The figures for the last 4 months ( 54.3 % , 52.8 % , 56.2 % and 56.3 %) determine the rupture of a growing trend that characterized the index fluctuation last year until October.” In other words, inflation has stabilized, the press release explains.

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Luis R. Miranda is the Founder and Editor of The Real Agenda. His 16 years of experience in Journalism include television, radio, print and Internet news. Luis obtained his Journalism degree from Universidad Latina de Costa Rica, where he graduated in Mass Media Communication in 1998. He also holds a Bachelor’s Degree in Broadcasting from Montclair State University in New Jersey. Among his most distinguished interviews are: Costa Rican President Jose Maria Figueres and James Hansen from NASA Space Goddard Institute. Read more about Luis.

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