Venezuela recorded inflation of 10.5% in March and accumulated more than 250% year-on-year

Last March Venezuela recorded inflation of 10.5%, which brings the cumulative inflation rate of 17.8% for the year, reported on Monday the Venezuelan Finance Observatory (OVF), an independent body composed of experts.

The increase compared to the previous month was 8.8 points, since inflation in February was 1.7%, recalled the OVF, adding that year-on-year inflation reached 251% in March, exceeding that of the previous month by 5 points, when it reached 246%.

The items that recorded the greatest increases were household equipment (105.9%), services (15.9%), communications (8.7%) and food (3.1%).

“The acceleration of inflation occurred in a context in which the exchange rate appreciated. Indeed, while in February the bolivar exchange rate against the dollar was 4.63 bolivars to the dollar, in March it reached 4.50 bolivars to the dollar, denoting a drop of 2.8 per cent,” he said.

He also indicated that this suggests that the anchoring of the exchange rate is “insufficient” to permanently reduce inflation.

“Among the factors that influenced the rise in prices was the announcement and subsequent application of the Tax on Large Financial Transactions (IGTF), which obviously created an effect of increasing expectations on the price level,” he explained.

That is why, he continued, this “regrowth” of the inflation rate was “entirely expected”, even more so when there have been “serious problems” for the application and implementation of the tax, which taxes payments in foreign currency or any foreign currency made in the country.

“Therefore, the recently decreed wage increase has already deteriorated due to the aforementioned price increase. Thus, the food basket jumped from $353 in February to $370 in March, almost ten times the minimum wage,” he said.

Last December, the Central Bank of Venezuela (BCV) ended hyperinflation in the country by recording 12 months with a rate below 50%.

(With information from EFE)

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