Venezuela’s inflation soars to 63.4 pct

CARACAS: Venezuela’s inflation rate has soared to 63.4 per cent - the highest in Latin America - the Central Bank announced Tuesday.

It was the first time the figure was announced since May.

Critics charge that President Nicolas Maduro’s socialist government has withheld data for its political benefit.

Maduro’s government has applied many measures trying to rein in inflation, to no avail.

It has imposed mandatory price controls, set limits on commercial space rents; and even closed the border at night to clamp down on smuggling, which it blames for worsening shortages.

Venezuela, which sits atop the world’s largest proven oil reserves, imports 96 per cent of the goods it needs.

Shortages of everyday goods such as toilet paper, have become common.

Most economists say runaway inflation and shortages are caused by massive government spending, including overseas; and by exchange rate controls and price controls in effect since 2003.

That makes many products artificially inexpensive to the point where it is profitable to smuggle them out to sell in Colombia.

The government has yet to give a gross domestic product (GDP) forecast for 2014, with the last projection coming eight months ago, when it predicted growth of four per cent.

Maduro is the closest regional ally of Cuba, the region’s only one-party communist state.

Venezuelan economic support is critical to keeping the Cuban government and economy afloat.

Cash-strapped Havana still has a centrally planned economy and cannot get access to international loans.

Venezuela supplies it with cutrate oil worth billions in exchange for Cuban doctors’ contract medical services. — AFP