Low-income Venezuelans hit harder by inflation rebound

[ChangoLoa]

The price of agriculture products increased by 6.7 percent in September



Economy Venezuela's households are not similarly affected by the negative effects of inflation. According to figures provided by the Central Bank of Venezuela, the impact of rising prices in September was 2.4 percent on the high-income sector of the population, whereas the impact in the poorest households was 3.1 percent.

This pattern, where the poorest people have been the most seriously hit by inflation, was frequent in 2008. Nevertheless, this year, inflation started to climb as of July and is closely related to increased food and non-alcoholic beverages prices.

Official statistics show that Venezuela's low-income families spend VEB 45 out of every VEB 100 to buy food items, while the proportion in higher-income groups is only VEB 15 out of every VEB 100.

Due to a plan based on massive imports, moderate consumption and harvest times, during the first half of the year the price of foodstuffs remained the most stable in years, with monthly increases lower than 1 percent. In July, there was a reversal of the trend and in September the prices of food and non-alcoholic beverages heightened 3.3 percent.

As a result, the accumulated cost of food items increased 8.7 percent in the third quarter of the year. In September, the price of agriculture products averaged 6.7 percent nationwide, while in cities like Barquisimeto the increase was larger and amounted to 9.8 percent.

Pedro Rivas, the president of the Federation of Agricultural Producers (Fedeagro), claims that "vegetables have a very important role to measure food inflation and the rainy season limits production because it affects plants."

Rivas added that "to solve this problem, we have asked the government to establish greenhouse systems, and protected environments." The prices of items such as onions, peppers and fruits that have harvest features similar to the vegetables have increased dramatically.

Rising food prices in the third quarter of the year also affect Mercal, the state-run food distribution network. The Bolivarian mission which distributes low-cost food, unable to sustain subsidies in a context where the decline of petrodollars has affected government revenues, decided to increase prices of staple foods such as pasta, chicken and rice. At the same time, in order to avoid shortages, the government has authorized price increases of regulated products sold in stores other than Mercal.

Since the government managed to contain the rise in food items in the first half of the year, accumulated inflation at the end of September was 13.7 percent, lower than the 27.3 percent recorded in the same period of 2008.

Similarly, thanks to food price controls, accumulated inflation among the poorest sectors of the population was 19.6 percent at the end of September, which is lower than a 22 percent inflation rate facing the high-income households. However, the stability of food prices has become a thing of the past.
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Translated by Gerardo Cárdenas

Víctor Salmerón
EL UNIVERSAL