Venezuela’s annual inflation rate reached more than 150 percent in October. On a month-on-month basis, however, it was possible to observe a rapid slowdown in price level growth. Government spending cuts and tax increases have helped.
Venezuela sees steep drop in inflation
The month-on-month inflation rate in Venezuela fell to 6.2 percent. Back in September, the price level was rising at a 28.7 percent month-on-month rate, Reuters reported, citing official data released by Venezuela’s central bank.
The government and the central bank helped
The rapid decline in inflation was due to restrictive economic policy, especially on the part of the government. It has significantly reduced budget spending and increased taxes. It has thus joined the central bank in its measures to reduce aggregate demand, whose exuberant growth has been the engine of hyperinflation for many years.
However, the annual inflation rate remains exceptionally high, but it too will decline over time. Prices rose 155.79 percent in October compared to October last year. Venezuela has also been helped to reduce inflation by the de facto dollarisation of many sectors of the national economy.
