The impact of inflation on the Venezuelan poor

September 14, 2010

A few months back, I can’t remember which of the pro-Chavez pseudo-economists was suggesting that the January devaluation would have very little impact on the Venezuelan poor, because of the programs like Mercal, PDVAL and the like the Government had in place to aid them. A few years back I actually posted an estimate of how inflation hits the different classes in Venezuela, but that data was outdated.

But the graph above, courtesy of the data from the Venezuelan Central Bank and published by El Universal, shows it with real and very recent data for the first eight months of the year. Level I (Dark line with solid dots) corresponds to the lowest strata of the population under the BCV’s definition. As you can see, the devaluation had the opposite effect, in the months following the devaluation they felt the most impact, an effect that still lingers to this date, wth an accumulated inflation of 21.7%. The second lowest strata is next, up 21.6%, Level III has had 21% inflation and the well-off have had 19.1%  so far in 2010, proving that it is actually the other way around.

No mystery here, it is the poorest who spend the most on food and it has been food, despite the Government controlling certain basic staples, that has gone up the most.

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7 Responses to “The impact of inflation on the Venezuelan poor”

  1. Dean A. Nash Says:

    Miguel, you nailed it with just three simple words: “No mystery here”. You then explained, for those with, shall we say, little comprehension of Economics, just how inflation hurts the poor most.

  2. Island Canuck Says:

    My unscientific chart of prices here in Margarita has now reached 40.46% since Jan. 1.

    On another note the electrical cuts here are increasing dramatically. 2 cuts yesterday totaling over 4 hours & as I type this we are again without light.

    Last week the local paper stated with great pride that Corpolec had now installed generation to meet 100% of the island’s needs.

    It has been straight down hill ever since.

    The additional problem is that even when the current is on it’s arriving at under 110 volts so many things don’t run properly including the A/Cs.

  3. torres Says:

    Other noteworthy graphs:

    Oil Production: http://www.bit.ly/dhYVNZ

    Consumer price index: http://www.bit.ly/c1wW4f

    Agriculture contribution to economy: http://www.bit.ly/cPheQS

  4. A_Antonio Says:

    Few years ago, I was making the buy of the food to my parent’s home, they are very old.

    I always felt that the increase cost of the food double, in percentage, the official inflation from BCV.

    The inflation is very low to indicate the real cost of food to everyone.

  5. sapitosetty Says:

    He’s not making fun of your English. He’s hinting that the price controls may cause inflation.

    Over at my blerg OW pointed out that in the Central Bank’s annual report, there are tables showing the effect of inflation on wages over time. Check out pages 113 and 114 of the report at http://www.bcv.org.ve/Upload/Publicaciones/infoeco2009.pdf. I don’t know if he and I are reading it right, but if so, it’s really depressing stuff.

  6. moctavio Says:

    yeah, doesn’t it mean in spite of?


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