Venezuela’s ever-increasing inflation continues to make it difficult for citizens and businesses to purchase even the basics needed to survive, and it looks like the end is nowhere in sight.
A report by the International Monetary Fund released this week outlines the rapidly rising inflation the country is experiencing, and does not have a sunny outlook for the remainder of the year.
A recent report from Bloomberg states that inflation in Venezuela has skyrocketed about 340,000 in just the previous six months of the year. Bloomberg uses the cost of a cup of coffee at a local bakery in Caracas to track inflation and make the numbers more relatable for readers.
Venezuela’s inflation is expected to reach 1.37 million percent by the end of 2018, according to the International Monetary Fund. This is even higher than the 1 million percent that the IMF had initially predicted in July, and 100 times higher than its estimate of 13,000 percent from January.
Information is not as available as it once was; the central bank in Venezuela ceased publishing economic information in 2015. Since then, reporters and economic followers need to rely on other resources to uncover just how bad the inflation has become. Indexes like the ‘cup of coffee” used by Bloomberg are used to track details of just how rapidly inflation is rising and to track details of how the country is changing.
Hoping to resolve the currency issues and inflation, Venezuela president Nicolas Maduro decided to change up the way the currency was calculated to look like the situation is better than it truly is. Removing zeroes from the currency did not change the inflation problem – 5,000,000 bolivars simply became 50 bolivars overnight – the purchasing power did not change.
The recent report from the IMF reveals that measures to correct inflation are not working. In addition to removing the zeroes from the currency, they also tried to launch the Petro — a cryptocurrency. The cryptocurrency initiatives have not helped; very few investors have come forward to spend money on the country’s failing economy.
The initial inflation problem was caused by several things; both the decline in oil prices and the socialist themed policies of President Maduro’s government have both contributed to the decline of the bolivar. According to Maduro:
“The production models we’ve tried so far have failed and the responsibility is ours, mine and yours,” he told his United Socialist Party. “No more whining. I want solutions comrades!”
The dramatic increase in inflation, coupled by the government’s persistence in pursuing policies that do not work and seeking out solutions that have not been effective mean that there is no relief in site for the average Venezuelan. The IMF will review the inflation in the country again in a few months, and outlets like Bloomberg continue to use creative methods to track inflation in the beleaguered nation.
~ Patriotic Freedom Fighter