CARACAS: Venezuelan consumer prices rose 800 per cent in 2016 while the economy shrank 18.6 percent, according to preliminary central bank figures seen by Reuters, the sharpest economic contraction in 13 years and the worst inflation reading on record.
An extended slump in oil prices has turned the OPEC nation's once-prosperous economy into a mirror of the latter day Soviet Union, with rampant product shortages forcing some to skip meals and wait hours in food lines.
President Nicolas Maduro's government blames the situation on an "economic war" led by political adversaries with the help of the United States. As the problems mounted, the central bank stopped releasing quarterly and monthly economic indicators.
The oil sector, which provides nearly all of Venezuela's hard currency, in 2016 shrank 12.7 per cent, according to an excerpt of a document containing the figures that was shown to Reuters. The non-oil sector shrank by 19.5 per cent, according to the document.
The figures could be changed in the process of approval by the central bank's board of directors, according to a source with direct knowledge of the situation.
Economy Vice President Ramon Lobo played down the inflation figure reported by Reuters while speaking with journalists on Friday, but declined to offer a figure himself.
"Let's wait until the central bank announces it, but that figure is totally crazy," said Lobo, though he acknowledged that "the economy is facing a difficult situation."
In 2015, the economy contracted 5.7 per cent while inflation reached 180.9 per cent, the central bank said last year.
Maduro accuses opposition-linked businesses of artificially creating economic problems. He says inflation is the result of speculative price-gouging by unscrupulous capitalists, and insists workers are better off as a result of minimum wage increases in 2016 that totaled 454 per cent.
"In a year we have raised minimum wage five times, and I say today that (those increases) are well above 2016’s inflation," he said during a news conference earlier this week, without offering an inflation figure.
The country's currency controls have left businesses unable to obtain dollars, meaning merchants struggle to stock shelves and factories sit idle for lack of raw materials or machine parts. Venezuelans last year began crossing into neighbouring Brazil and Colombia in droves to buy groceries.
Investor concern that Venezuela may not be able to continue servicing its foreign debt has made its bonds among the highest-yielding emerging market securities, paying investors on average 21 percentage points more than similar US Treasury notes.
Maduro has dismissed rumours that the country or state oil company PDVSA could default, noting that the ruling Socialist Party has never missed a bond payment. -- REUTERS