1/ According to the consumer price index elaborated by the National Assembly, monthly inflation in #Venezuela jumped to 55.1% m/m in July – thereby taking it back above the hyperinflation baseline of 50% (!)
2/ Under widely accepted definition of hyperinflation proposed by Cagan in seminal study (1956) an episode of this extreme economic phenomenon begins when threshold is 1st crossed but only ends when monthly increase in price level drops below 50% and stays there for at least 1yr
3/ Measured in this way, the current episode of #hyperinflation in #Venezuela has not only been by far the WORST in #LatinAmerica in terms of peak annual rate but also one of the worst in world history in terms of its duration.
4/ To put that into perspective for you: Given that it started in November 2017, it is now lasted for 2 years and 9 months. ❗️
5/ The comparatively short life of most instances of #hyperinflation is explained by the fact that they are so painful that they are normally curtailed by a combination of #fiscal adjustment, currency reform and international assistance. Not really on the table in Venezuela 🇻🇪
6/ It is true that #Venezuela´s hyperinflation has been less virulent since early-2019 than it was in its earlier explosive phase. Why?
7/ This primarily reflected a slowdown in monetary expansion, achieved through the containment of government (major) spending and a credit squeeze via imposition of high reserve requirements on banks.
8/ so, the initial sharp deceleration has not been sustained, and monthly inflation has settled at a still very high rate, rising above the 50% threshold every now and then. Economically draining for the Venezuelans
9/ The occasional surges are related to factors such as #income transfer payments by the #government, spikes in the #exchangerate and supply side disruptions. #OOTT
10/ Given impact of collapse in #oil production on government revenues and the lack of access to external finance, there is little prospect of hyperinflation ending once and for all until political change allows a full-blown stabilisation and reform programme to be implemented.
