Venezuela Sees Skyrocketing Prices as Dollar Soars 54% in 2022

venezuelan bolivar
Written by Johnson Philip

Venezuelans are feeling the squeeze as prices soar, even when measured in foreign currency. A new report from market research firm Ecoanalitica reveals that prices marked in dollars have risen a staggering 54% in 2022, hitting the pockets of those who have been using the dollar as a way to protect against inflation.

Inflation in Venezuela continues to spiral out of control, with even dollar-denominated prices skyrocketing. Economist Asdrubal Oliveros, a partner at market research firm Ecoanalitica, reported that prices marked in dollars surged by an alarming 54% in 2022, reflecting the dire inflationary situation currently gripping the country.

The inflation crisis in Venezuela has hit essential goods particularly hard, with food and beverages prices seeing a staggering 66.7% increase. The situation is just as dire in the restaurant and lodging sector, where prices jumped by an eye-popping 95% due to the impacts on tourism.

And if we consider the prices denominated in the national fiat currency, the inflation becomes unbearable, and food and beverage prices skyrocketed by 150% during the same period of time. 

The country recently got out of a period of hyperinflation that started in 2017 and finished in Jan. 2022, when the country registered 12 months with month-on-month inflation rates lower than 50%.

In Venezuela, many stores have turned to mark their prices in dollars to make managing their inventories and pricing easier. Although most stores still accept payment in bolivars, the local currency, the use of dollars as a means of payment has been on the decline since the government implemented a tax on its use in March. However, the U.S. dollar remains widely used as a unit of account.

This price increase, which has been denominated popularly as “inflation in dollars,” is now affecting the savings of many Venezuelans who, like Argentines, have taken refuge in foreign currency and in dollar-pegged stablecoins as a hedge against inflation. The bolivar faced a downward spiral during the two last months of 2022, plunging to historic lows and exacerbating the demand for other, more stable currencies.

The firm expects this trend to continue, with prices also rising significantly in 2023. This might change, however, depending on the openness of the Venezuelan government to adopting a more official dollarization process.

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