Venezuelan inflation accelerated in January as price cuts enforced by soldiers deployed at shops across the country failed to stall the world’s fastest increases in the costs of basic goods.
Consumer prices rose 3.3 percent last month, compared to a 3.6 percent median estimate of seven analysts surveyed by Bloomberg. Prices rose 56.3 percent from a year earlier, the central bank said in a statement on its website today.
President Nicolas Maduro sent regulators backed by military troops to more than 1,000 electronic, furniture and toy stores to cut prices in November ahead of local elections the following month. Monthly inflation slowed to 2.2 percent in December from 4.8 percent as a result, the central bank said.
“The numbers show a complete failure of the government’s economic policies,” Asdrubal Oliveros, director of Caracas-based consultancy Ecoanalitica, said in a telephone interview today. “Forced price cuts was a political decision, which didn’t address the root of the inflation, the central bank’s money-printing to finance the public sector.”
Maduro has blamed inflation and shortages on an “economic war” waged by the “parasitic bourgeoisie.” He gave businesses until Feb. 10 to cut prices to “fair” levels and reduce their profit margins to a maximum of 30 percent.
“The president has taken decisions and measures that mitigated the ascent of prices,” the central bank said. “Nevertheless, some effects of the economic onslaught against the nation continue to be felt.”
Venezuela’s scarcity index reached 28 percent in January, the highest since the central bank created the measure in 2005, as price cuts cleared shop inventories. This means that more than one in four basic goods was out of stock at any given time.
Reducing shortages depends on the government releasing dollars to importers, Oliveros said. “If that doesn’t happen, the scarcity index will have important political costs,” he said.
To ensure a regular supply of goods for Venezuelans, Maduro said Feb. 4 he is “prepared to wage a total economic revolution.”
“If we have to expropriate, we’re going to expropriate,” Maduro said.