“The hiperfinflación, but it will have been at home, “says Humberto Reco in a popular market in Caracas, not expecting prices to stop rising uncontrollably as they have in the last four years.
This 75-year-old pensioner resents in his slim body that Venezuela continues to be the country with the highest inflation in the world.
In 2021, the index closed at 686.4%, according to the central bank (BCV): less than 50% per month, which, according to the traditional concept, closes a hyperinflationary cycle that began in 2017.
But Reco believes more in prices than in indicators. “In general, I improve, really, I do not see,” he reaffirms in the corridors of the municipal market of Chacao.
Venezuela closed 2017 with an inflation of 862%, which shot up a year later to 130,000%. In 2019 it was 9.585% and in 2020 it was almost 3,000 percent.
According to the traditional concept of the American Philip Cagan, from 1956, Venezuela comes out of hyperinflation because it registered a monthly figure below 50 percent for 12 months.
However, according to the vision of the also economists Americans Carmen Reinhart and Kenneth Rogoff, from 2011, would still be missing “a little” because their parameter is that of an annualized rate below 500%, the economist and professor at the Metropolitan University Hermes Pérez explained to AFP.
“It is still the highest figure in the world,” insists the expert. “If we take the inflation of 2021, if we compare it with Latin America”, with figures that do not exceed double digits, “it is still by far … the highest.”
The dollarization de facto, which displaced the devalued local bolivar, and which is a product of hyperinflation itself, contributed to the drop in the indicator. Also the reduction of the fiscal deficit and the stability of the exchange rate after the relaxation in 2018 of the strict controls, but economists agree that deeper reforms are needed to see more progress.
Pérez, who was head of the BCV’s exchange desk, points out that the entity must stop issuing money to finance the state-owned Petróleos de Venezuela (PDVSA), which has been going through precarious conditions for years.
Analysts estimate that Venezuela can close 2022 with an inflation of between 120% and 300 percent.
“Inflation in dollars”
The slowdown is not palpable for the common citizen. Reco even complains that “not even” the little he has in uniform it reaches you. Talk about “dollar inflation.”
The economist and director of the Ecoanalítica consulting firm, Asdrúbal Oliveros, estimates that Venezuela is registering price increases in dollars that are higher than international standards.
The firm assures that the costs in foreign currency rose 40% in 2021, compared to 2020.
“People say that every day things are tighter, I say:” no, every minute, [está] rudo … with a capital R, “says Manuel Quijada, a 67-year-old vegetable seller, who says he raises his prices weekly.
Some in the Chacao market say they raise them every day; others, depending on the season. The hike varies from job to job.
Despite everything, Marina Dusei (62) feels that she can better organize her budget, especially with the stability that the value of the dollar has maintained, between 4.5 and 5 bolivars, in the last six months.
Previously it could be fired in a matter of hours.
“We no longer go out to buy what we like but what we need,” says this woman, who assures that her income is insufficient for the purchase.
Either way, he sees the situation a little better than three years ago, when in the midst of hyperinflation, shortages were rampant. “I think we can keep improving,” he says optimistically.