By Genesis Carrero Soto
Caracas, Jan 20 (EFE).- Venezuela has emerged from its four-year cycle of hyperinflation, news that the government and its supporters are hailing along with the new business activity developing around the country, but the people on the street are not seeing any relief in food prices or in terms of their devalued salaries.
More or less as in earlier years, the citizenry continues to suffer from indiscriminate price rises given that, although in December inflation was reported to be 7.6 percent and over 12 continuous months it has been below 50 percent, “hyperinflation leaves traces.”
That is the opinion of economist Ronald Balza Guanipa, the dean of the Economic and Social Sciences Department at the Universidad Catolica Andres Bello (UCAB), who agrees that the inflation figure for December did, in fact, put an end to the hyperinflation cycle.
He arrived at that conclusion based on the most accepted definition of hyperinflation, established by US economist Philip Cagan in 1956, which says that 12 consecutive months with an overall price rise below 50 percent are needed to be able to consider prior hyperinflation to be at an end.
“It doesn’t mean that we’ve gotten out of the problem. There are many who are never going to get out because they are not among us any more. So, it’s good not to simplify … Much of what was destroyed along the road is unrecoverable,” Balza said in an interview with EFE.
The Venezuelan Central Bank (BCV) says that inflation in 2021 was 686.4 percent, making the South American nation the country with the highest inflation in the world last year.
In Latin America, Argentina ended the year in second place with 50.9 percent inflation and Brazil was third with 10.2 percent, far below the figure for Venezuela.
The figures have their real-world effect in the clamor of Venezuelans who say that their money “isn’t enough” to cover their basic needs, since prices are “exorbitant” and “everything is completely dollarized.” Salaries are paid in the weak local currency, the bolivar, but almost everything has to be bought in dollars, as Caracas laborer Orlando Bolaños said.
“The central government … pays attention to the needs of the people, but we’re having trouble. You still see people in the trash dumps looking for food because their pay isn’t enough to buy it … Pay me a good salary,” he said.
He was simplifying the situation that Balza had explained by noting that it’s not possible to “pass over the destructive period that occurred before,” since the improvement expected for the country after getting out of the hyperinflation period is not being felt by everyone.
“There are those who aren’t going to be able to see (the improvement) because along the road they left the country, they died, they stopped studying, their illnesses got worse or because they couldn’t deal with their problems,” Balza said.
That is the case for Estelina Garcia, a domestic worker who earns $10 for each home she cleans and whose pay is only enough to buy chicken, sugar and some potatoes or rice.
“I work cleaning and I earned $10. With $10 I can only buy three things. Everything’s expensive … Imagine, a chicken goes for $7, you earn $10 and you buy some sugar for $1.50 because right now we’re like Yankees, not Venezuelans,” Garcia told EFE.
On Jan. 15, in his annual address to Parliament, President Nicolas Maduro expressed confidence in celebrating the emergence from hyperinflation.
“This makes us optimistic in having overcome the burdens of hyperinflation and in being able – with a lot of discipline, work, effort, with great intelligence, daring and wisdom – in 2022 to start down a road to leveling and destroying high inflation,” he said.
But, his confidence appears naive given Balza’s opinion, with the economist saying that all the figures offered by Maduro, like economic growth being reflected in the opening of new businesses in the country’s main cities, are not proof of improvement.
“Giving the example that we all can see in a publicity announcement or on a social network, or on a news channel and not seeing all that’s lacking around us shows a lack of respect for Venezuelans who are in the midst of the crisis,” Balza said.
Among those people are businessmen like Yoel Martinez, the owner of a grocery store in the Caracas “favela” or shantytown of Petare, the largest such neighborhood in the country, who was hard hit by the years of hyperinflation and barely managed to stay afloat.
“It was very difficult. I had lots of difficulties. Many times, I was on the verge of bankruptcy. Business fell off a lot,” he told EFE, adding that he will still have trouble trying to survive with or without hyperinflation.