Venezuelan Government to “Establish New Economic Order” Next Year after 56.2% Inflation in 2013
Merida, 31st December 2013 (Venezuelanalysis.com) – Inflation in Venezuela was high in November, but has also consistently decelerated since October. Nevertheless, President Nicolas Maduro said that next year the government will “revise” key aspects of the economy in order guarantee that it is “at the service of the people”.
According to the BCV report for November and December, the National Consumer Price Index, or inflation, decelerated towards the end of the year at 5.1% in October, 4.8% in November, and 2.2% in December. Historically in Venezuela November has experienced higher inflation as workers receive end of year bonuses and prices go up as Christmas and holidays approach.
“During 2012 the economic situation was characterised by high growth, moderate inflation, and low scarcity, which allowed for the presidential elections to be held in a stable environment. However, in October 2012 some key variables for the Venezuelan economy began to be altered; the most notable of those being the irrational and speculative increase in the unofficial value of the dollar, which unleashed serious consequences for the national economy going into 2013,” the BCV report argued.
“The measures of inspecting [businesses] allowed for the tendency [of price increases] to be contained in November and reversed in December,” the BCV report stated.
November’s inflation was highest in Maracay, then San Cristobal (5.1 and 5.0%) and lowest in Caracas (3.7%), where the government’s inspections were concentrated.
Food and non alcoholic drinks was the area with the highest inflation in November, at 7.5%.
Speaking at a press conference yesterday, President Nicolas Maduro said that for next year the country needs to achieve a balance between its incoming and outgoing foreign currency, create a strategic reserve of foreign currency, and a “single register” to administer dollars, as well as achieving a balance between imports, production, and consumption.
According to Maduro, Venezuela has finished the year with 56.2% inflation and economic growth of 1.6%, but “if there hadn’t been the economic war” those indicators would be better. He argued that the business sectors were aiming for 10% inflation in November and “total collapse” by December, but that the national government’s measures prevented that. Inflation in 2012 was 20.1%.
For next year, “We’re going to revise everything... it’s going to be a year establishing a new internal economic order, a dynamic, free, healthy one at the service of the population,” Maduro said.
The president also reported that following his meeting with opposition mayors and governors, they named a liaison commission, with Antonio Ledezma as coordinator. He said that so far 190 projects from the 75 opposition mayors have been assigned to the commission.
He also reported that according to the government’s research, “over 70% of the population agrees with implementing a system of fair and balanced petrol prices” in Venezuela. There has been some debate that the price of petrol, currently at Bs0.097 per litre for 95 octane petrol, needs to be increased.
Maduro recalled that 2013 started with concern for then President Hugo Chavez’s recovery. “And just as we spent that new year, concerned for life, health, struggling with him... we began 2013 full of pain and uncertainty, that was the framework for a good part of the year”.
"The year 2013 has been and will go down in history as a year of the Venezuelan people's loyalty and love for Chavez and the homeland," he said.
“Hopefully the empire understands that Chavismo is a reality, that we’re united, and that plots are pointless,” Maduro concluded, referring to the United States.
Published on Dec 31st 2013 at 3.13pm
A BCV graph showing the relationship between the scarcity index and various key political events; the oil lock out, the 2007 referendum, and the death of Chavez (BCV)
A graph comparing the price paid by consumers (orange) with the price paid by wholesalers (dotted black line) in 2012 and 2013 (BCV-INE)
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