Person shopping for groceries in a store in Caracas, Venezuela. Photo: EFE/File photo.
Caracas (OrinocoTribune.com)—The Central Bank of Venezuela (BCV) has published inflation figures for the first four months of the year, which show a decline between January and April and an accumulated inflation of 86.7% so far this year.
Delays publishing macroeconomic indicators have been common in recent years, notably after the tightening of US attacks against Venezuela in a failed attempt to oust President Nicolas Maduro; the last BCV inflation update before this newest publication was back in October 2022.
According to data published Friday, May 12, by the country’s chief monetary body, inflation in April was 3.8%, preceded by a variation of 6.1% in March, 19.3% in February and 42.1% in the month of January. For November 2022, the inflation was 12.6% and for December 35.3%.
The BCV figures contrast with those published by the Venezuelan Finance Observatory (OVF), an NGO run by economists linked to the Venezuelan opposition. Five days ago, the OVF reported that inflation in April was 2.5%, below the 3.8% reported by BCV. Even the accumulated variation, which OVF set at 71.8%, is less than the 86.7% reported by Venezuela’s monetary authority.
By the end of August 2022, the Venezuelan currency, the bolívar, suffered a dramatic weakening against the US dollar, reporting a sharp devaluation of 52.7% in official indicators and of 96% in black market indicators compared to January 2022 figures. The devaluation spree continued until December 2022.
The black market exchange rate for January 3, 2022 was set at 4.76 bolívars per dollar, and the BCV rate was set at 4.59. On August 25, 2022, the black market rate had increased to 9.33 and the official rates increased to 7.1.
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By January 1st of this year, the official exchange rate was 17.44 bolívars per dollar, while the black market’s rates were 18.41, evidencing a sharp devaluation that, in the case of Venezuela and many countries, always brings about inflation.
At that time, many economists explained that the cause of the problem was a lack of cash flow in the BCV, reducing its dollar sales and pushing the price of dollars up. No official explanation was provided then, but by November and December, high-ranking officials began discussing cryptocurrencies as being partially responsible for the crisis together with the US blockade.
Later in March 2023, an unprecedented corruption plot within state-owned oil company PDVSA involving the sale of oil using questionable channels and cryptocurrencies to elude US sanctions was unveiled, proving that the “cash flow issues” affecting Venezuela during the last quarter of 2022 and thus pushing the devaluation of the bolívar was mainly a consequence of the corruption plot.
Since January 2023, BCV’s offer of dollars in the exchange rate market along with the entering of Chevron as new dollar provider have stabilized the value of the bolívar against the US dollar, thus leading inflation rates back to levels deemed acceptable by the Venezuelan government. Last Friday, May 13, the official exchange rate closed at 25.34 bolívars per dollar.
Orinoco Tribune Special by staff
OT/JRE/KZ
