Food prices report the highest jump in 15 months
Regulated prices can no longer be maintained
According to information compiled by the Central Bank of Venezuela (BCV), food prices increased by 3.3% in November, the highest jump in the last 15 months.
Food is the item having the greatest impact on the quality of life of low-income families. Particularly, consumers need more money to pay for agricultural food products, which climbed by 6.5% in November, for an accumulated increase of 21.8% in the last 12 months.
Following the decision to freeze prices for many regulated products, companies recorded a decline in production and shortage ensued. Inevitably, prices climbed due to the gap between supply and demand.
Economist and professor at the Institute of Higher Administration Studies (IESA) Pedro Palma, explained, "The shortage index in October stood at 16%, thus leading to inflation."
The professor went on and remarked, "Imports are not running normally due to some structural inconveniences at seaports. Moreover, in view of the impending devaluation, the parallel foreign exchange rate has shot up."
Pressured by shortage, the Venezuelan Government recently raised the prices of some regulated products, including rice, coffee, and corn flour. This will have an impact on December inflation. Further price adjustments, namely in white cheese, pasteurized milk, chicken, beef, and other products are also expected in the mid-term as they have not been increased in a year.
From December 2011 to November 2012, the accumulated rise in the price of regulated products stood at 12.1%, as against 28% in December 2010-November 2011. Consequently, food prices in 2012 have hiked some 17.1% versus 31.3% in 2011. Fixed prices are no longer sustainable; a price adjustment must be made. Inflation will escalate, though.
Translated by Jhean Cabrera
President Nicolás Maduro is not only the heir to the throne, but also to an economic crisis which demanded urgent measures to rectify the course. The crisis showed up in two aspects: a 50% inflation estimate, and shortage of staples ranging between 70% and 98%. These issues might hit the President's poor popularity; considering his feeble electoral victory of 1% over his challenger.