By Jeremy Morgan
Latin American Herald Tribune staff
CARACAS – Amid a solid wall of silence from the government about the latest inflation figures from the Venezuelan Central Bank (BCV), economists are mulling prospects for price rises this year and the likely impact on standards of living. They appear to think the first of these will go up but the second will go down.
Datanálisis, a consulting and polling company, is forecasting that consumer price inflation could come out at anything between 25% and 35% this year. On balance, that would imply little or no improvement, and perhaps a worsening, on last year – for which the comparable figure from the BCV was 30.9%, after 22.5% in 2007 and 17.5% in 2006.
Even at the lower range of this forecast, Datanálisis reckons personal consumption will fall this year by around 3%. But were inflation to hit the full 35%, the company says consumption could shrink by a shocking 13%.
The government claims to have gotten to grips with inflation since the turn of the year, but apparently has yet to convince the economists. According to one who works for the state and asks to remain nameless, the Datanálisis forecast is on the “optimistic” side.
For a start, this observer argues, the BCV has changed the way in which it calculates the inflation index, so there’s no real basis for an historical comparison. Second, that same source adds, there are doubts that the official index accurately measures the true extend of inflation. The outlook for this year, according to this observer, is that price rises could climb to 40%, perhaps more.
Anecdotal evidence suggests that people know they’re in for a tough time, and it would seem some of them feel they’re already immersed in it. There’s much more tendency to put foodstuff back on the shelf at the supermarket once the price has been noted.
Butchers say they’re getting used to being asked to “cut a bit more off or I don’t want it,” as a middle class lady loudly demanded at a counter in Chacao earlier this week. She showed no signs of having any compunction about pressing the point for all to hear; maybe she thought it would bring added pressure on the butcher. He, for his part, shrugged and complied.
While officials eschewed commenting on inflation – which boosted prices by an official accumulative 6.7% during the first four months of this year – National Statistic Institute (INE) President Elías Eljuri opted to point to other aspects of the economy, claiming these showed that the government’s policies were working.
Eljuri’s topic of the day was unemployment, looking back over the long term. He claimed that the jobless rate had fallen from 14.6% in March 1999 – President Hugo Chávez’ first year in power – to 7.3% in the same month this year.
The decline, he said, was the result of 21 consecutive quarters of economic growth, right up to the present. He conceded that the economy had contracted, by a net 7.8%, during 2002 and 2003, but blamed this on the two-month national strike orchestrated by the Opposition against Chávez in those years.
Eljuri also said that the government had succeeded in reducing the proportion of the workforce earning a living in the so-called “informal” deregulated sector of the labor market. This had fallen over the same period from 50.2% to 43.3% of those in work.
Such claims have long run into scepticism from economists. They ask, for instance, how INE can accurately measure the number of people working outside the system, particularly as some of them do so in more than one job.
Eljuri was not reported to have passed comment on the outlook for employment in a Venezuela where the reckoning is that hard currency earnings from oil could be halved this year compared with 2008. Oil accounts for roughly half gross domestic product and four-fifths or more of export income.