Venezuela has the world’s highest cost of living, with an annualized inflation rate of 404%, according to data from Trading Economics.
In June, prices rose 8.5% on average, with variations that include a 19.5% increase in the services sector, 6.9% in housing rentals, 7% in food and non-alcoholic beverages, and 9.1% in expenses related to transportation, according to the Venezuelan Observatory of Finance.
Although in February economists and financial specialists ended a period of 50 continuous months of hyperinflation in the country, Venezuela could return to this financial phenomenon due to economic instability.
“We see how the countries that lead inflation in Latin America continue to be Venezuela, where monetary policy is at the service of the fiscal, that is, central banks have been used as an effective source of government financing.” This has already been shown to be harmful and lead to persistent inflation. “It is clear that those who do not have central banks or who are not independent have triggered this indicator,” said José Ignacio López, director of economic studies at Corficolombiana, to the newspaper La República.
According to the statistics site “Statista,” between January 2022 and June 2023, the average annual inflation rate increased in most countries. The only exceptions were Brazil, Canada, China, India, Russia, and the United States. In June 2023, Brazil had the highest interest rate at 13.75%. The lowest interest rate was recorded in Japan, with a negative 0.1%.
Although a large majority of countries in the world have already managed to lower their inflation indicators, there are still four economies that maintain rates in the triple digits. Venezuela is currently the economy with the highest cost of living in the world, with an annualized inflation rate of 404%, according to Trading Economics.
Venezuela could soon enter another period of hyperinflation as Nicolas Maduro launches the money-printing press to ramp up spending by the end of the year in 2022, according to Bloomberg.
Venezuela is followed by other countries such as Lebanon, Syria, Argentina, Zimbabwe, Sudan, and Suriname as the nations that have seen the inflation indicator rise the most.
“In headline inflation, we see a downward correction led by the decline in inflation in the United States, from 9% to 3%.” Inflation is also slowing in Latin America. At a cross-cutting level, we see how the countries that lead inflation in Latin America continue to be Venezuela, where monetary policy is the service of fiscal policy, that is, central banks have been used as an effective source of government financing. This has already been shown to be harmful and lead to persistent inflation. In short, there is a declining global inflation dynamic. “At the country level, it is clear that those that do not have central banks or that are not independent have triggered this indicator,” said José Ignacio López, director of economic studies at Corficolombiana.
Lebanon is the second country with the highest inflation rate in the world, with a 253% rate, which is 6.6 points lower than the previous month. The monthly variation of the CPI (consumer price index) has been 7.2%, so the accumulated inflation in 2023 will be 122.4%.
“It should be noted the rise of 30.1% in housing prices, until its year-on-year rate stood at 207.7%, which contrasts with the decrease in transport prices of -5.5% and a year-on-year variation of 217.8%,” according to Datosmacro.
