Prices in Venezuela have steadily increased even when denominated in foreign currencies. According to data collected by Ecoanalitica, a market research company, prices denominated in dollars have increased by almost 54% in 2022, affecting the incomes and savings of Venezuelans who use the US dollar as a hedge against inflation.
Prices rise even in dollars in Venezuela
Inflation has risen further in Venezuela, with the prices of goods and services being marked up even when denominated in dollars. Asdrubal Oliveros, economist and partner at Ecoanalitica, a market research company, declared that prices denominated in dollars have increased by almost 54% in 2022, being affected by the inflation that is currently hitting the country.
Among the most affected items were food and beverages, which saw a price increase of 66.7%. Likewise, prices in the catering and accommodation sector, linked to national and international tourism, increased by 95%, making this sector the sector with the highest increase.
With prices denominated in the national fiat currency, the inflation figures are even worse, with food and drink prices soaring 150% over the same period.
The country recently emerged from a period of hyperinflation that started in 2017 and ended in January 2022, when the country registered 12 months with monthly inflation rates below 50%.
An unofficial dollarization process
While most stores still accept bolivars, the local currency, as payment, for some time now prices have been marked in dollars to simplify inventory and price management. Dollar payments have been falling since the government proposed and established a tax for its use in March, but the US dollar is still widely used as a unit of account.
This price hike, commonly referred to as “dollar inflation,” is now affecting the savings of many Venezuelans who, like Argentines, have taken refuge in foreign currencies and dollar-pegged stablecoins to hedge against inflation. The bolivar faced a downward spiral in the last two months of 2022, plunging to historic lows and exacerbating demand for other, more stable currencies.
The company expects this trend to continue, with prices also rising significantly in 2023. However, this could change depending on the willingness of the Venezuelan government to adopt a more formal dollarization process.
What do you think of the prices denominated in dollars which increase by more than 50% in 2022 in Venezuela? Tell us in the comments section below.
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