Venezuela’s inflation rate has hit a new high, according to university research, with consumer prices in the crisis-ridden country rising by more than 40,000% annually for the first time on record.
Steve Hanke, an applied economics professor at Johns Hopkins University, told Business Insider on Friday that annual inflation in the country has risen as high as 41,838%. Hanke, who calculated the inflation figure, has tracked prices in the country for more than two decades.
Venezuela’s government has largely stopped reporting economic data, including internal measures of inflation. The Central Bank of Venezuela, which did not immediately respond to request for comment, has not independently released inflation figures in at least a year.
Venezuelan President Nicolas Maduro has passed blame for the roiled economy onto others, including opposition activists and officials in Washington. At a campaign rally in May, he blamed hyperinflation on “criminal mafias.”
But economists point out that Maduro runs the unorthodox policies they say have pushed the country into economic crisis. The socialist leader has repeatedly refused international aid to Venezuela.
“It’s internal,” Hanke said. “Government spending continues to accelerate and the sources of revenue start drying up.”
The government has defaulted on a majority of their outstanding bonds, which economists estimate add up to about $60 billion. Foreign exchange reserves have fallen by about $2.5 billion in the last three months, according to analysis by Capital Economics.
As state-run oil industry PDVSA falls apart, economists say a rise in global oil prices is adding to the pain. Brent crude oil is up more than 64% this year. And as President Donald Trump cracks down on Iran via zero-tolerance oil sanctions, the international benchmark has rallied more than 8% this week.
Production at PDVSA — which accounts for 95% of export earnings in the country and a quarter of gross domestic product — was cut in half from January 2016 to January 2018, according to the US Energy Information Administration. And as the crisis deepens, operations are continuing to wane.
Those conditions, Hanke said, have all but killed investor sentiment.
“There’s an expectation part of it, too,” Hanke said. “Everyone who has a bolivar wants to get rid of it like a hot potato because they expect it’s not going to be worth anything tomorrow.”
The International Monetary Fund estimated in January that Venezuela’s inflation rate could rise as high as 13,000% for all of 2018. Hanke was unsurprised by the discrepancy, saying no one can “accurately forecast the course or the duration of a hyperinflation.”