A customer pays for her purchase with US dollars in an open-air fruit and vegetable market in Caracas, Venezuela, on February 10, 2023. Photo: Gaby Oraa/Reuters.
In August 2024, the inter-monthly variation of the National Consumer Price Index (INPC) in Venezuela was 1.4%, according to a report by the Central Bank of Venezuela (BCV). This represents the lowest figure in August since 2012 (1.1%), and the second-lowest mark since 2008 (1.8%), when the index began on the national level. This reduction in inflation was achieved despite the illegal coercive economic measures—euphemistically referred to as sanctions—imposed on Venezuela by the US and its vassals and despite the ensuing limitations on Venezuela’s international financing.
The report highlights that in Venezuela, inflation in August is generally higher than inflation in July. This is due to the school holiday season. Of the 17 years in which the INPC has been compiled, in 11 of them, including the current one, inflation in August has been higher than inflation in July.
It should be noted that in the second four-month period (May–August) of 2024, accumulated inflation stood at 4.6%, representing the lowest variation in 16 years.
“The clear progress in price stabilization is the tangible result of the new economy and the efforts of all Venezuelans, since the Venezuelan economy has not enjoyed external financial inputs nor access to its own resources abroad to return to stability. On the contrary, this progress has been achieved in a context of economic siege resulting from the criminal sanctions imposed on the republic and its people,” noted the BCV report.
Exchange-rate issues
Orinoco Tribune reported last week that briefly, before the July 28 presidential elections and after election day, the black market exchange rate grew at an unusual pace that worried some analysts. On July 22, this exchange rate was 41.03 bolívars (Bs.) per US dollar, while the official exchange rate was 36.6 Bs. per US dollar, representing a gap of 10.7%. In recent months, the gap between these two rates has oscillated between 4% and 6%.
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The same variables for Tuesday, September 3, demonstrated a widening of the gap, with the black market (parallel) exchange rate at 43.25 Bs. per US dollar against 36.64 Bs. per US dollar in the official exchange rate. This represented a gap of 15.3%.
In recent years, the gap between the official exchange rate and the black market rate has created price disturbances leading to spikes in inflation. This is not the case thus far in the current exchange-rate scenario, as many analysts have pointed out that this phenomenon responds mostly to far-right political interests as opposed to the real conditions of the market. This might explain why many sellers of US dollars are not finding buyers and have been selling at an exchange rate well below the black market rate.
This recent instability in the exchange rate is under control. However, if not tackled properly by Venezuelan authorities, it may lead to inflation in the near future.
(Últimas Noticias) by Odry Farnetano with Orinoco Tribune content
Translation: Orinoco Tribune
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