Key facts:
Venezuela’s inflation rises after benefiting from seven months of decline.
10 minimum wages are needed to acquire the food basket in Venezuela, said the OVF.
When the economy seemed to be improving slightly in Venezuela, the new monthly inflation index lowers the favorable projections. Something that affects the pockets of Venezuelans, despite the salary increase recently decreed, as well as those who seek alternatives to store value in the dollar or bitcoin.
The Venezuelan Finance Observatory (OVF) announced that monthly inflation registered a significant increasegoing from 1.7% in February to 10.5% in March 2022. This was announced on April 4 after compiling the data obtained in the last month.
This is the first increase since July 2021, since since then the inflation rate had been falling month by month. A period of consecutive decline that lasted seven months in total and breaks with the index collected in March 2022. This can be seen in the chart below, where a breakout of this prolonged decline is evident.
With this last data, the annual rate of inflation in Venezuela becomes 251%, a figure also higher than February when it stood at 246%. Among the items that registered the greatest increases are the items for household equipment (105.9%), services (15.9%), communications (8.7%) and food (3.1%).
This means that the recently decreed salary increase has already suffered a deterioration due to the price increase captured last month. The OVF stated that after the new inflation record almost ten minimum wages are required in Venezuela to buy at least basic food that the human being needs.
This of course affects each person differently depending on how much they earn. Although by way of getting an idea, the OVF Maintains that while in Venezuela the food basket costs USD 370, the average salary in the private sector is USD 108.7.
In other words, not even the average earnings that Venezuelans have is enough to buy the food basket. Among them are managers who earn around USD 234.7, professionals and technicians USD 152.7, and workers USD 100, according to the organization.
The dollar did not serve to store value in Venezuela, while bitcoin did
The new inflation index occurs in a context in which the exchange rate appreciated, which did not benefit those who had dollars saved as reserves. The OVF reported that the exchange rate of the bolivar in February was USD 4.63, while in March it fell to USD 4.50, denoting a drop of 2.8%.
Therefore, he commented that the peg to the dollar is insufficient to permanently lower inflation. Even for those who earn their salary in dollars in Venezuela, given that the increase in product prices is calculated and expressed in this international currency, as seen in the graph of the food basket.
At the same time, bitcoin (BTC) saw a price increase, rising from $43,300 at the end of February to $45,100 at the end of March. This will allowed Venezuelans who bought the cryptocurrency to receive a 4% profit on those dates, unlike those who kept dollars, which gave a loss of 2.8% in that period.
In other words, this means that bitcoin, although it did not manage to overcome the last monthly inflation recorded of 10.5% in Venezuela, allowed it to at least face the 3.1% that food suffered, according to data collected by the OVF. . However, it is worth clarifying that this type of asset is highly volatile, with which it usually experiences abrupt falls despite the fact that in the long term it has shown to appreciate in value.
Therefore, it is vital to consider being careful when storing savings in cryptocurrency to face inflation in Venezuela, as well as in any other valuable asset. Right now, bitcoin is trading above $46,500 according to the CriptoNoticias calculator.