By Brian Ellsworth
CARACAS May 9 Venezuelan consumer prices rose
in April at their fastest rate in three years, the central bank
said on Thursday, presenting a growing economic challenge for
recently elected President Nicolas Maduro.
Inflation last month reached 4.3 percent, with the
annualized rate hitting 29.4 percent, driven by a 6.4 percent
rise in food and non-alcoholic drinks.
The figures will make tough reading for Maduro, who won
election last month by a narrow margin of 1.5 percentage points
but is constantly accused of economic mismanagement by
opposition leader Henrique Capriles.
Two devaluations and heavy government spending during most
of last year have spurred inflation, which has become a top
complaint throughout the OPEC-member nation.
"The April inflation in 2013 in our country was higher than
what was registered in most Latin American countries in all of
2012!" Capriles said via his Twitter account.
Government leaders generally acknowledge that inflation is a
problem. But they insist that citizens' lives continue to
improve thanks to social programs such as subsidized groceries,
free health clinics and a massive state-backed home-building
They say the problem is driven by businesses arbitrarily
raising prices - an argument critics scoff at.
Economists point out that constant expansion of monetary
liquidity, which grew 39 percent in the 12 months to April,
makes inflation inevitable because it leaves more money chasing
the same number of goods and services.
The April figure was the highest since a 5.2 percent
increase in April 2010, which also came several months after a
Annualized inflation is now closing in on the 30 percent
rate estimated by Wall Street economists for the entire year of
2013 and nearly double the full-year target of around 15 percent
used by legislators when they drew up the 2013 budget.
The Central Bank's index of product shortages reached a
four-year high of 21.5 percent, reflecting the nagging
complaints of Venezuelans, who are struggling to find goods
ranging from auto parts to wheat and corn flour.
"We cannot rule out the possibility that shortages will get
worse before they get better," said local consulting group
Econometrica in a research note released before the inflation
figure came out.
Most economists believe lowering inflation will require
cutting or at least braking state spending.
But Maduro's popularity depends in large measure on
maintaining the heavy outlays of late socialist leader Hugo
Chavez's 14-year rule to finance generous social assistance and
help ensure robust economic growth.
Blow-out campaign expenditures last year that helped
re-elect Chavez left the government with fewer resources for
programs such as housing construction and subsidized stores.
Critics say years of nationalizations under Chavez have
limited the country's capacity to produce its own goods, while
currency controls have left many importers unable to bring in
consumer products from abroad.
Venezuela in February devalued the bolivar currency to 6.3
per dollar, from 4.3, in a widely expected move meant to help
shore up government finances stretched by the heavy spending in
In March, the government, which has maintained currency
controls for a decade, created a parallel foreign exchange
system that auctioned $200 million. Local media reported the
dollars were sold at rates as weak as 14 bolivars, though the
government has declined to confirm that.