Venezuela May Prices Rose at Record Pace After 32% Devaluation
Venezuelan consumer prices increased at a record pace in May after a devaluation of the bolivar pushed up the cost of imports.
Prices climbed 6.1 percent from April, the central bank said today in an e-mailed statement, the fastest expansion since the consumer price index was created in 2008 and exceeding the 4.1 percent median estimate of four economists in a Bloomberg survey. The annual inflation rate accelerated to 35.2 percent from 29.4 percent the month before. Prices in Caracas rose 6.2 percent in May, the highest monthly jump since June 1996.
Venezuela’s government has only held one auction of dollars since introducing a new exchange system in March, one month after it devalued the currency 32 percent. That has left companies starved of the greenbacks they need for imports, forcing them to turn to the black market rate of about 30 bolivars to the dollar, compared with the official rate of 6.3.
“These figures came about in a scenario affected by the foreign exchange adjustment in February and by the raising of the minimum salary from May 1,” the central bank said.
The subsequent decline in imports is pushing up the cost of available goods. Food, transport and restaurants and hotels pushed prices higher in May, rising 10 percent, 3.9 percent and 6 percent respectively, the bank said.
Venezuela in February devalued the bolivar from 4.3 bolivars per dollar in a bid to close an estimated combined fiscal deficit in 2012 of 14.5 percent of gross domestic product for the government and state oil company Petroleos de Venezuela SA, according to Bank of America Corp. analyst Francisco Rodriguez.
As the economic situation deteriorates and dollars become more scarce, Finance Minister Nelson Merentes said May 30 he will meet investors in North America and Europe in the first such trip for nine years.
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