By Brian Ellsworth
CARACAS Feb 11 Venezuela's consumer prices
accelerated in January from the previous month, leaving the OPEC
member country's annualized inflation rate near a staggering 56
percent and the central bank's shortages index hit a record
The 3.3 percent rise in January came as President Nicolas
Maduro decreed new price controls that limit corporate profit
margins at 30 percent in an effort to combat what he calls an
"economic war" being staged by opposition politicians.
The 51-year-old former bus driver in November ordered
merchants to slash prices and sent troops to occupy some
business in efforts to stabilize prices, winning the praise of
even some of his critics.
But Tuesday's figure spurred renewed questioning of the
economic model of state-led growth and currency controls
advanced by late socialist leader Hugo Chavez.
"The greater the government works to confront the 'Economic
War,' the worse the results are. Is this the right path?"
opposition economist Henkel Garcia of Caracas-based Econometrica
wrote via Twitter.
January's biggest increases came in restaurant and hotel
prices, which rose 4.8 percent. Food and non-alcoholic beverages
rose 4.3 percent and alcohol and tobacco products were up 4.0
The central bank prominently noted the Maduro government's
measures to lower prices, but added "some effects of the
economic onslaught against the nation continue to be observed."
The 12-month rate hit 56.3 percent, just a tick above
December's 56.2 percent pace. The bank called that a positive
development since it showed the annualized rate was no longer
accelerating as quickly as it had in previous months.
But the bank's scarcity index, a measure of product
shortages that have become a top complaint of consumers across
the country, jumped to a record 28 percent.
Venezuelans have for months been struggling to find basic
consumption items including cooking oil, toilet paper, and corn
flour used for the typical and ubiquitous arepas, or cornmeal
Shoppers often have to wait several hours in lines or visit
more than one store to obtain basic goods.
Businesses say the shortages are caused by currency controls
that prevent them from importing raw materials and machine
parts. Government leaders call them the result of a conspiracy
to derail Maduro's government.
A primary driver behind inflation is the torrid expansion of
the money supply that vastly outstrips the pace of economic
growth. Liquidity grew 3.2 percent in the month of January
alone, a figure nearly identical to that month's inflation.
In 2013, the money supply expanded nearly 70 percent.
Maduro in November ordered shops to slash prices for
consumer durables such as televisions and home appliances,
helping the ruling Socialist Party make a strong showing in
December's municipal election.
He assured the measure would push prices down 5 percent that
month, but they in fact rose 4.8 percent.
In January, he decreed the Fair Price Law, which requires
firms to obtain "fair price certificates" to access dollars
through the country's currency control mechanism.
It also carries prison sentences of up to 14 years for
crimes including hoarding and "destabilizing the economy."
Socialist Party sympathizers acknowledge inflation is a
problem but highlight the expansion of social services during
Chavez's 14-year rule.
"It is important to emphasize that the population continues
to receive, with equal or greater intensity, the benefits that
the state provides through state-run commerce that offers food
at accessible prices," the central bank said in its statement.
Critics insist the situation is a sign Chavez's economic
model is running out of steam.