Venezuela's silly gimmicks can't fix its disastrous inflation problem

Venezuela has a serious inflation problem. The official annual inflation rate hit 57 percent in February. This week the Venezuelan central bank released new figures showing that the monthly inflation rate in March was 4.1 percent. The central bank declined to provide an annual inflation rate for March.

Of course, this isn't going to fool anyone. People know how to add up a bunch of monthly inflation statistics to get an annual one. And a 4.1 percent monthly inflation rate corresponds to an annual rate of about 60 percent.

And some statistics suggest that Venezuela's inflation rate is much higher than that. Steve Hanke is an economist who collects data on the black-market exchange rate between the dollar and various global currencies. His data suggests that the value of the bolívar has collapsed over the last year. And if domestic prices are rising as rapidly as the bolívar/dollar exchange rate, the real inflation rate is more than 100 percent:

Steve Hanke

It's important to note that that's a big "if." In the long run, domestic prices should rise at about the same rate the bolívar falls on international exchange markets. If the value of the bolívar falls in half in international markets, domestic prices should double. But it can take a while for the full effects of a plunging bolívar to be felt in the domestic economy.

Still, it's clear that Venezuela has a serious and growing inflation problem. No amount of statistical gimmickry is going to hide that fact.

We're here to shed some clarity

One of our core beliefs here at Vox is that everyone needs and deserves access to the information that helps them understand the world, regardless of whether they can pay for a subscription. With the 2024 election on the horizon, more people are turning to us for clear and balanced explanations of the issues and policies at stake. We’re so grateful that we’re on track to hit 85,000 contributions to the Vox Contributions program before the end of the year, which in turn helps us keep this work free. We need to add 2,500 contributions this month to hit that goal. Will you make a contribution today to help us hit this goal and support our policy coverage? Any amount helps.

One-Time Monthly Annual

$5/month

$10/month

$25/month

$50/month

Other

$

Yes, I'll give $5/month

Yes, I'll give $5/month

We accept credit card, Apple Pay, and Google Pay. You can also contribute via