Venezuela Prices Rise Most This Year as Industry Stalls
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Venezuelan consumer prices rose at the second-fastest pace in at least six years in April and May as tighter dollar supplies to companies crimped output, while street protests continued.
Prices rose 5.7 percent in both April and May, up from 4.1 percent in March, the central bank said yesterday in a statement posted on its website. Annual inflation accelerated to 61.5 percent in April from 59.3 percent in March, then slowed to 60.9 percent for May.
The government began rationing water and electricity last month, adding to a growing list of scarce goods and services ranging from milk to pregnancy tests. Nationwide protests against shortages and inflation since mid-February have left at least 42 people dead.
“Political conflict” in the country’s largest cities affected the economy and negatively influenced inflation, the central bank said. The entity entrusted with price stability didn’t publish its scarcity index.
Ford Motor Co. (F) joined Toyota Motor Corp. (7203) and Dutch truck-maker CNH Industrial NV (CNHI) last month in suspending production in Venezuela because of shortages of dollars to import parts. Venezuela’s largest privately-held company, Empresas Polar SA, shut down its Maracaibo pasta plant April 29 because of lack of imported flour.
A decade of price controls have made dollars increasingly scarce, forcing companies and individuals without access to official currency systems to pay 10 times the official rate on the black market for greenbacks. To aide supplies, the government started a supplementary daily currency market in March, where a dollar trades for about 50 bolivars, compared with the official rate of 6.3 bolivars.
The market, known as Sicad II, covers around 5 percent of the country’s foreign currency needs, President Nicolas Maduro said June 10.
Venezuela’s economy will shrink 1 percent this year, according to a median estimate of 15 economists surveyed by Bloomberg last month. That compares with the 0.5 percent growth they forecast in February.
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