Venezuela zeroes in on rampant inflation

VENEZUELA: President Nicolas Maduro attempted to tackle Venezuela’s staggering inflation yesterday by lopping three zeros off the increasingly worthless currency called the bolivar.

New bills replacing those like the current 100,000 note – worth less than 50 US cents on the commonly used black market – should begin circulating on June 4, he said.

The move comes as Venezuelans struggle to find food, medicine and cash in the worst economic crisis to strike the oilrich country.

‘‘Let’s defend our bolivar!’’ Maduro said.

Venezuela holds the world’s largest oil reserves and once shined as one of Latin America’s wealthiest nations.

A fall in global oil prices and a collapse in Venezuela’s crude production after nearly 20 years of socialist rule and mismanagement of the state-run oil company sent the economy into a tailspin.

A cash shortage has spiked as the inflation rate has soared above 6000 per cent in the last 12 months.

The economic crisis has left Venezuelans in queues for hours to buy common food items and withdraw small increments of scarce cash from ATM machines.

One kilogram of sugar costs around 250,000 bolivars. Meanwhile, the monthly minimum wage is less than 400,000 bolivars, which along with a food bonus amounts to about US$5.60 at the black market exchange rate.

Critics consider Maduro’s plan a superficial solution with little chance at solving the deep economic problems plaguing Venezuela.

‘‘Dropping three zeros from the currency without solving the problem driving hyperinflation will help nothing,’’ economist Asdrubal Oliveros said. –