CARACAS, Jan 6 (Reuters) - Venezuelan President Nicolas Maduro on Monday announced a 10 percent increase in the minimum wage and pensions in efforts to maintain consumer spending power amid spiraling inflation that reached 56.2 percent last year.
Maduro blames the soaring consumer prices on an opposition-led effort backed by Washington, though critics say it is the product of an aggressive expansion of the money supply and declining productivity of the economy.
“This is because we are at war,” Maduro said during a televised broadcast announcing the measures. “There is an economic war against the country and we are defending ourselves.”
Maduro said the increase would leave the minimum wage rising faster than inflation over 12 months.
The hike would put the monthly minimum wage at 3,270 bolivars. That is equivalent to $519 at the official rate, which economists say is vastly over-valued, but only $51 at the black market rate.
Maduro, a former union leader, says price increases have been artificially “induced” by unscrupulous business leaders seeking to exploit consumers and destabilize his government.
Critics note the country’s monetary liquidity -- a key measure of the money supply -- expanded by 69 percent in 2013 compared with economic growth of less than 2 percent, resulting in more money chasing the same amount of goods and services.
They say the private sector has been weakened by state-centered economic policies of late socialist leader Hugo Chavez, including exchange controls and a wide-ranging price control mechanism, which Maduro has vowed to maintain.