CARACAS Jan 6 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
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
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.