Venezuela’s month-on-month inflation rate rose sharply in December. According to Venezuelan independent economists, the risk of hyperinflation returning to the country is growing significantly. Moreover, the Venezuelan central bank has not published the rate of consumer price growth since October.
December inflation up 37.2%
The price level in Venezuela rose 37.2 percent month-on-month in December. This is according to data published by a group of non-governmental economists called the Venezuelan Finance Observatory. In fact, the last time the official site (the Venezuelan central bank) reported inflation was in October last year. At that time, prices were up 155 per cent year-on-year.
The increase is due to the easing of monetary and fiscal policy
In month-on-month terms, Venezuelan inflation had been in the single-digit range for nine months in a row, right up to December. The country owed this to a restrictive monetary and fiscal policy, which consisted, among other things, of fixing the exchange rate of the domestic currency or imposing limits on public spending, including tax increases.
But since November, these policies have been eased, leading to a sharp rise in inflation. According to this group of economists, December’s annual inflation probably rose above 305 %. The risk of hyperinflation re-settling in the country has thus increased significantly.