CARACAS, Wednesday February 12, 2014 | Update

Shortage jumps to 28% after amid lower supply in January

Inflation hit 3.3% in January; annualized inflation stands at 56.3%

Reduced sales of foreign currency have undermined supply of staples (Ocarina Espinoza)
Wednesday February 12, 2014  12:36 PM
The imbalances of the Venezuelan economy are worsening, as mirrored by growing prices and shortage, which recorded a record high in January.

The figures disclosed by the Central Bank of Venezuela (BCV) show that low production, price controls, and restricted sale of foreign currency have hit supply.

Shortage soared 5.8%, from 22.2% in December to 28% in January. This is the highest level ever recorded, followed by 24.7% in January 2008.

Economist and university professor José Guerra has explained, "We are facing a contractive adjustment. Foreign currency sale is restricted to save US dollars. This leads to contraction in domestic supply. Before, the supply gaps due to low production were bridged with imports, but today domestic supply is low and imports have plummeted."

The expert believes shortage is likely to worsen. "Corporations have been relying on their stocks, but (products) are running out."

Amid falling domestic and foreign supply, the government has injected additional money into the economy. Venezuelan authorities recently informed they were working on some measures to bring money supply back to normal levels, yet expenditure continues rising and so does money supply.

High levels of currency in circulation bring prices up. The Central Bank of Venezuela informed inflation hit 3.3% in January, the same rate recorded one year earlier. Consequently, the annualized price index stands at 56.3%.

Translated by Jhean Cabrera