MercoPress. South Atlantic News Agency

Venezuela's inflation for the year 2021 reaches “only” 686.4%

The economy is on a path to some stability, but at what price?

Venezuela's Central Bank (BCV) has confirmed December's 7.6% marked the 12th consecutive month with inflation below 50% for an yearly total of 686.4%, it was announced.

December 2021 was the fourth consecutive month with a single digit figure, after inflation rose 7.1% in September, 6.8% in October and 8.4% in November. In fact, December 2020 was the last month in which the INPC registered an increase of more than 50%, specifically 77.5%.

According to the Venezuelan Finance Observatory (OVF), an independent entity that brings together several economic analysts, the behavior of prices in recent months responds to the “stability” that the exchange rate has maintained in the Caribbean country.

However, during its balance for the month of November, the observatory assured that this policy of stability resulted in the fall of international reserves.

”This policy of exchange rate stability was expressed in a fall in the liquid international reserves of the Central Bank of Venezuela (BCV) of US $ 171 million, as a result of the sustained intervention of the issuing institute in the exchange market.

Despite these figures, Venezuela continues to be going through a deep economic crisis with inflation still high and soaring prices which keep affecting the livelihoods of hundreds of thousands of Venezuelans, some of whom make a monthly minimum wage equal to US $ 1.50.

This deceleration in prices has been due to some measures implemented by the government, among them, the restriction of bank credit and lower spending in bolivars to maintain the stability of the exchange rate.

As part of the strategy, which seeks to highlight that hyperinflation is being fought, government entities and the state oil company PDVSA now make parts of their payments to suppliers with foreign currency in cash.

In the midst of hyperinflation and economic collapse, the Venezuelan government at the beginning of 2019 relaxed controls on the economy, which has allowed more cash to circulate. In any case, inflation is just one side of the story and the performance of the economy has remained unmeasured since May 2019.