Venezuela Prices Rise at Fastest Pace in More Than Two Years
Venezuelan consumer prices rose at the fastest pace in two and a half years in December after the government crimped imports, exacerbating shortages of staple goods and fueling speculation of a devaluation.
Prices rose 3.5 percent from the month before, when they gained 2.3 percent, the central bank said today, exceeding the 2.4 percent median estimate of eight economists in a Bloomberg survey. The nationwide annual inflation rate rose to 20.1 percent from 18 percent in November, the bank said.
Since President Hugo Chavez won re-election in October, the bolivar has fallen 40 percent to 17.8 bolivars per dollar on the black market, where many non-essential imports are financed, according to Lechuga Verde, a website that tracks the rate. At the same time, shortages of goods ranging from toilet paper to poultry have increased as the government restricts the supply of dollars to the official market.
“Devaluation fears are driving people to exchange their bolivars on the black market,” Francisco Rodriguez, economist at Bank of America Merrill Lynch, said on the phone from New York on Jan. 8. “There has been a strong contraction of dollars released at the official rate in the last two months.”
Barclays’ Alejandro Grisanti, Goldman Sach’s Alberto Ramos and HSBC Holdings Plc’s Ramiro Blazquez predict the government will weaken the bolivar as much as 50 percent by March 31.
Food prices, which account for 37 percent of the inflation index, rose 5.7 percent in December. Alcoholic drinks and tobacco, transport, and restaurants and hotels pushed consumer prices higher last month, rising 4.9 percent, 3.3 percent and 3.1 percent respectively, the bank said.
The lack of dollars in the system is fueling the shortages of eggs, rice, corn flour and other goods.
Vice President Nicolas Maduro has appeared several times on state television in recent weeks, ordering the national guard to seize producers it says are hoarding food supplies and promising to make life difficult for “bourgeoisie” businesses he accuses of trying to sabotage the economy.
Consumer prices in the capital Caracas rose 2.9 percent in December while annual inflation quickened to 19.5 percent, the bank said.
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