MercoPress. South Atlantic News Agency

Maduro tells Central bank he expects 5% deflation in November because of the mandatory price cuts

The Venezuelan president declared 'economic war' on big business and hoarding

President Nicolás Maduro has sent clear messages to the Venezuelan central bank arguing that following the 'economic war' he declared on big business and hoarding with the mandatory cuts in prices, November should register “5% deflation and not inflation”.

 By exerting pressure and amending laws, the Venezuelan government has made the central bank print banknotes to finance state-run companies and to deliver –with nothing in exchange– millions of US dollars from the country's international reserves. As a consequence annual inflation was running at 54% last October and the dollar is trading in the parallel market at six times the official price.

But now the second stage of the 'war' seems to target measurement of key indicators such as inflation and the shortage index. President Maduro has been raising the tone when he addresses central bank experts and has even questioned the economic reports he has been given.

“Mandatory cuts in prices, deflation should be recorded in November. It should reflect a 5% deflation and no inflation”, said the Venezuelan leader, according to media reports from Caracas.

A former research manager of the central bank José Guerra outlined that there is a sort of extortion to abate inflation at any cost, including decree-laws. Guerra warned that such actions could “undermine the credibility of the statistics, just like it happened in Argentina”.

But it all seems that pleasing Maduro with inflation at minus 5% in November will be hard to achieve even in light of mandatory price cuts in home appliances stores.

The main driving force behind inflation in Venezuela is the high price of food and non-alcoholic beverages, as households spend almost one third of their income in these items, when they can find them in the empty shelves of supermarkets and stores.

Venezuela's economy grew 1.1% in the third quarter compared with the same period a year earlier, the central bank said earlier this week. The oil and gas rich country current account surplus grew in the third quarter to 4.1 billion dollars from 2.3 billion in the same period a year earlier, while the capital and financial account deficit widened to 4.6 billion from 4.4 billion dollars.