Venezuela inflation hit 180.9% in 2015 : Central Bank
CARACAS : Venezuela’s central bank on Thursday released long-awaited data showing the depth of the OPEC country’s recession.
A day after President Nicolas Maduro announced a package of measures seen as insufficient to salvage the unraveling economy, data showed Venezuelan inflation hit 180.9 percent in 2015, one of the highest rates in the world while the economy contracted 5.7 percent.
The depth of Venezuela’s crisis and raised the prospect new measures may hurt Venezuelans without significantly improving finances in a country already facing shortages of basics like milk and medicines.
Fuel Price will be increased for the first time in nearly 20 years and the complex system of fixed exchange rates has been devalued and revamped.
The fuel increase could amount to 5 percent of this year’s budget, according to Reuters calculations, and will give state oil producer PDVSA’s strained balance sheets a breather.
Filling a small car will still cost at most half the price of a soft drink, or around 20 cents at the black market rate. But coupled with the currency change it could fan price increases and hit already strained pocketbooks.
The increase is also insufficient to stem lucrative gasoline smuggling to neighboring Colombia and Guyana.
Wall Street investors are increasingly concerned about a potential default, with Venezuela facing some $10 billion in debt payments amid a major cash crunch.
The devaluation will not significantly impact the remaining US companies operating in Venezuela. Many decided long ago that the stronger exchange rates do not reflect reality and moved their accounts to weaker rates, writing off billions of dollars.
The change in fuel prices will provide some relief to state-owned PDVSA, which is facing major debt payments this year amid low oil prices. The company said in a statement that if consumption patterns remain the same as last year some 68 billion bolivars equivalent to $6.8 billion at the strongest official rate but just $68 million on the black market will be saved.
Venezuela’s 91 octane gasoline will rise 1,329 percent to 1 bolivar per liter and 95 octane gasoline will rise 6,086 percent to 6 bolivars. Small queues formed in front of some service stations as drivers filled up before the measure kicks in on Friday.
The shift may encourage some drivers to load up on the cheaper 91 fuel – though that would likely hurt foreign firms who have been supplying Venezuela with specialized products for its domestically-produced gasoline.
As the economy has deteriorated, Venezuela’s central bank has kept negative economic data under wraps only publishing figures for 2015 last month.