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August 23, 2014

PRICES rise 2.2% IN DECEMBER, 56.2% THIS YEAR

Tuesday, December 31, 2013

Venezuela inflation data under scrutiny

Venezuela’s President Nicolás Maduro (right) speaks next to Vice-President Jorge Arreaza, with an image of late president Hugo Chávez seen in the background, during a press conference in Caracas yesterday.

CARACAS — For three weeks Venezuelan economists have complained that the country’s Central Bank is delaying delivery of its inflation report and manipulating the statistics to hide the government’s poor record of containing prices. Its release yesterday only fuelled those suspicions.

The report showed inflation slowing in the past two months and, for the first time, omitted data that tracks the level of product shortages. Critics say they don’t buy the numbers and fear that the bank, long a redoubt of balance and credibility in polarized Venezuela, is caving to political pressure and losing its autonomy from President Nicolás Maduro’s socialist government.

“It makes me very sad to read this report,” said Asdrubal Oliveros, director of Caracas-based economic thinktank Econanalítica yesterday. “It looks like propaganda written by the Information Ministry, not a technical report that you’d expect from a central bank.”

The Central Bank said that inflation slowed after the government took “exceptional and historic” actions to combat a speculative run-up in prices by groups trying to destabilize the country.

Prices jumped 4.8 percent in November and 2.2 percent in December, the Central Bank of Venezuela and the National Institute of Statistics said in a statement. In October, prices jumped 5.1 percent.

As is customary, the report didn’t provide an annualized rate of inflation, but the data means that in the last 12 months, inflation has reached a whopping 56.2 percent — 36.1 percentage points higher than the figure reached in December 2012. Venezuela finished last year with an annual rate of 20.1 percent.

Maduro was forced onto the defensive at a press conference yesterday. When asked about the omission of the annual rate at a press conference yesterday, the president conceded that prices rose 56.2 percent this year, saying it was “unusual.” He argued that “induced” and “speculative” inflation had been caused by a “economic bubble.”

He added that the annual figure was only reached thanks to the “bourgeoisie” methodology employed by the Central Bank’s statisticians.

He also defended the strident, ideological tone of the Central Bank’s 10-page report, saying that if opponents hadn’t waged an “economic war” in the aftermath of the late president Hugo Chávez’s death in March, inflation would’ve ended 2013 under 10 percent.

“We’ve seen a speculative, induced inflation that exceeds the natural rules of the economy,” Maduro told reporters at the presidential palace.

Also missing from the report is the closely-watched scarcity index, which in October showed a record 22 of 100 products were out of stock.

‘NEW NATIONAL ECONOMIC

ORDER’

The bank’s report goes to great lengths to align itself with recent economic policies announced by Maduro, who was recently given the power to rule by decree for one year by Venezuela’s National Assembly. The Central Bank concluded in its report that Maduro’s policies are on the side of the Venezuelan people in its construction of socialism and a “new national economic order.”

As such, the bank said 2014 is a “propitious” moment to review the methodology used to calculate the consumer price index, a sign to Oliveros that future reports will understate inflation, much like Argentina’s INDEC, which has been criticized by the International Monetary Fund for the reliability of its statistics.

Economists had been warning that the report would be compromised ever since Maduro last month rebuked the bank for the way it measures prices. He said last month that internal calculations showed prices fell five percent in November as a result of the government’ slashing of prices of television, refrigerators and stoves after it seized several retail chains accused of charging speculative prices.

The forecast was immediately questioned because appliances carry only a small weighting in the price index, making it impossible to swing the gauge at a time prices for food, clothing and services are rising in tandem with a steep decline of Venezuela’s currency in the black market.

Intrigue about the delay began to build after the bank abruptly cancelled a December 19 press conference to release the report. The Central Bank’s bylaws require it to publish inflation data within the first 10 days of each month. On the rare occasions when it has missed the cut-off date before, it was late by only a few days. Never before has the bank published inflation data for two months simultaneously nor before the period under study has ended.

Representatives of the bank yesterday sought to justify the delay because it said it needed to go back and verify price movements after the government’s action.

ARMY TV, SPIDERMAN

The president also used yesterday’s press conference to confirm the launch of a new television channel of the Armed Forces, criticize the “boring” programming on state-run channels and to renew his attack on opposition leader Henrique Capriles. Maduro branded the governor of Miranda state “a facist” and said a recall referendum should be held on his governorship.

The president, who hinted at the creation of the television channel for the military along with an exclusive bank for the same sector previously, said he has asked state channels for “better quality television.”

“Capitalism has managed, through fun and humour, to attract people with their contests and movies. Meanwhile, we sometimes run the risk of making very boring television,” he said.

“Some colleagues of mine think that making boring TV is revolutionary, but then nobody watches it. We therefore have a challenge on our hands: to make television with high ratings, that capable of carrying our message. To do this we need to innovate,” he added.

Maduro also used the press conference to took aim at a surprising new opponent: Spiderman.

The head of state made reference to the recent film Spiderman 3, describing it as a “chain of death,” before declaring it was unsuitable for children to watch.

Herald with AP, Reuters

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