Venezuela's consumer prices rose 5.1% in October, pushing the 12-month inflation rate to 54.3%, the highest mark since the late President Hugo Chávez took power in 1999. The news was released by the central bank on Thursday which also revealed that the scarcity index had reached its highest level since 2009.
Hyperinflation is attributed to two main factors: one is ramped-up public spending from President Nicolás Maduro, Chávez's successor. The central bank said the country's money supply grew 70% in the past 12 months, much of it to underwrite a big increase in government spending.
Likewise currency controls Chávez implemented in 2003 have made access to dollars difficult, causing widespread shortages in an economy that depends on imports for roughly 70% of everything it consumes. The central bank's scarcity index, a measure of basic items missing from the market, edged up to 22.4% in October from 21.2% in September, the highest since at least 2009.
It all adds up to more local money chasing fewer goods—a recipe for price increases, economists said. To this must be added rampant corruption and mismanagement of the oil dependent economy.
The current rate is quite a bit higher than the average inflation rate during the Chávez/Maduro era of 23.6%, according to a presentation Oil Minister Rafael Ramírez made to investors on Thursday.
However President Maduro has alleged that Venezuela's mounting economic woes have been caused by right wing conservatives that want to see him and the Bolivarian revolution out of office, and are hoarding products in order to drive up prices. Earlier Thursday, Mr. Maduro said 1,000 inspectors had been sent out as part of a recently launched task force to root out businesses that seek inflated profit or hoard products.
We are not going to accept speculation under any circumstances, said Mr. Maduro, during an appearance televised on state television. If I have to confiscate an entire warehouse, I will every day beginning now.
The crackdown was part of a host of economic measures Maduro announced late Wednesday aimed to stabilize the economy. The moves included a reorganization of the government's foreign-currency exchange channels, which would be housed in a new centralized agency dubbed the National Center for Exterior Commerce.
Strict controls make dollars available only through government channels in Venezuela. The lack of dollars has resulted in a flood of Bolívares on the black market, where a dollar fetches nearly 60 Bolívares, according to websites that track the rate. That is more than nine times the official peg of 6.3 Bolívares per dollar.
The government has made it a crime to even mention the black-market rate, punishable by as many as seven years of prison time. But Mr. Maduro openly presented details on the currency market during his comments Wednesday night, even mentioning the names of underground websites locals use to track the illegal rate.