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Inflation in Venezuela has exceeded 300% in the past 3 months, according to Bloomberg data

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Key facts:
  • Venezuela has emerged from hyperinflation, but currency devaluation continues to affect the economy.

  • According to one university professor, there are prices “like Dubai’s and salaries like Sudan’s.”

Inflation has once again risen significantly in Venezuela. In the past three months alone, the indicator has risen more than 300 percent, according to data compiled by Bloomberg.

In a Nov. 1 report, the news agency took that although product prices in Venezuelan territory have increased significantly since the beginning of this year, in the last quarter of this year the inflation indicator increased 359% year-on-year.

Although this is a rather high figure, Bloomberg analysts acknowledge that it is well below the hyperinflation peaks seen in Venezuela. in previous years, exceeding 300,000% in 2019 alone.

Bloomberg notes that the rise in inflation over the past three months. responds to increased government spending, seen mainly through benefit payments (bonuses). This is in addition to the payment of subsidies and other commitments acquired by the government.

As reported by CryptoNews last September, it will be paid the vacation bonus in full. To education workers. This happened in the middle of the year, which led to an important devaluation of the bolivar And drove up inflation in August and Septemberrespectively.

Later, the payment of benefits commonly granted through the government portfolio Patria was maintained. More recently the installment payment of the Christmas bonus was reported. or Christmas bonus, which could be read as increased monetary issuance and increased inflation.

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All this came at a time when oil revenues, the country’s main source of income, remained fluctuating due to low production by Petróleos de Venezuela (PDVSA), a company hit by U.S. sanctions. In October alone, oil exports were down 23 percent from the previous year.according to Reuters.

According to Daniel Cadenas, professor of economics at Caracas Metropolitan University, the inflation rate of more than 300 percent that he estimates Bloomberg reiterates that although the country has left hyperinflation behind, it is still “trapped in high monthly rates” of inflation.

In this regard, he recently reported a 17% inflation per month, according to data from the Observatorio Venezolano de Finanzas (OVF), an independent body that provides estimates in the absence of information from the Central Bank of Venezuela.

Prices similar to those in Dubai

This whole inflationary situation means that Venezuela has product prices “similar to Dubai,” according to Professor Cadenas, who laments that this is happening “when salaries similar to those in Sudan will be paid.”

Indeed, the Venezuelan bolivar depreciated by one-third against the U.S. dollar in the last quarter, for an average rate of 9 bolivars per U.S. dollar.. This, as increased government spending in domestic currency increases the purchase of the greenback, driving up its price.

This situation, warns specialist Cadenas, “mainly affects the poor.” who make up a large part of the Venezuelan population.If you follow the data United Nations. It also affects the increased flow of migration of Venezuelans to other countries.

For Tamara Herrera, director of the economic analysis firm Síntesis Financiera, this trend of inflation and devaluation is likely to continue, at least until the end of the year. This figure will be influenced by payments and bonuses which are traditionally given to workers during the Christmas season..

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Inflation would give bitcoin more space.

Accelerating inflation in Venezuela, which could lead citizens to take greater refuge in bitcoin (BTC), one of several ways they have to protect themselves from the crisis in the long run.. This, despite the bear market that has caused their price to plummet by more than 50 percent.

Due to its historical upward trend, the first cryptocurrency has power. To serve the Venezuelan people in the trenches.. Although it is true that it has become customary in Venezuela to hold physical dollars, studies show that bitcoin is increasingly being used in this country.

One of these was carried out by the analysis company Chainalysis, which determined that, until August last year, Venezuela is the seventh country in the world with the highest bitcoin adoption rate.

Exact adoption levels are not known at this time, due to the lack of official dataas claimed by the analysis company weeks ago.

These analyses also clarify that in addition to BTC, other cryptocurrencies are widely used by Venezuelans, particularly stablecoins such as USD Tether (USDT). These currencies include. 30 percent of retail in the Caribbean country, according to Chainalysis.

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