A report released by the Congress (aka National Assembly) a few days ago shows that the inflation rate in Venezuela was 65.2% in August. This means that the country is experiencing again a monthly inflation rate higher than 50%. The last time the National Assembly had reported a rate higher than 50% was in February of this year. It should be noted that the last time the Central Bank of Venezuela (BCV) reported the country’s inflation rate was in April of this year.
This means hyperinflation may be taking place, even though it lasts only a month (as long as the monthly inflation rate exceeds 50% as previously noted). This is the case of the hyperinflation recorded in Chile in October 1973, or in Peru in September 1988, among others.
If the monthly inflation rate in Venezuela fell below 50% between March and July of this year, this could give the wrong idea about hyperinflation disappearing. That is why 12 consecutive months with inflation rates of less than 50% must pass in order to determine that hyperinflation is over.
On the other hand, it is obvious that Venezuela’s economic policy is not aimed at resolving the huge imbalances being dealt with at present (unfortunately, inflation is not the only one). As a result, if we take into consideration all the months that have passed since inflation exceeded a 50% monthly rate (according to the National Assembly was in November 2017), which is exactly 22 months until August 2019, then hyperinflation in Venezuela is already among the twelve longest in history. In fact, it has exceeded the duration of hyperinflation in Bolivia (the second longest in Latin America with 18 months). It has also exceeded the 21-month hyperinflation recorded in Zimbabwe over the past decade.
Should this trend continue and hyperinflation remains on the rise until January 2020, it would stand among the five longest hyperinflations in history (Ukraine, Azerbaijan, Greece and Nicaragua make up this group). The first two have recorded three years while the two last have almost 5 years, with Nicaragua being the longest with 58 months.
At the start of hyperinflation in Venezuela, it was believed it was a short-term process. It was noted at that time that it depended on the policies to be implemented. It is quite clear that the policies implemented in Venezuela have not been addressed to effectively curb hyperinflation. The evidence is there for all to see.
It is also quite evident that the problem with hyperinflation is not the magnitude itself. It is the dramatic effect it has on people’s lives, on the destruction of the currency’s purchasing power, on the destruction of jobs and companies, on the migration of millions of people, on a reduced investment in public services, and so forth.