In March, the inflation rate in Venezuela rose to 10.5% after seven months of consecutive decline. The OVF said people need ten minimum wages to buy the food basket in the country.
The Venezuelan economy seemed to improve slightly, but the new monthly inflation index lowers optimistic projections. That affects the finance of Venezuelans and those seeking alternatives to store value in US dollars or Bitcoin (BTC), despite the recently decreed salary increase.
According to the Venezuelan Finance Observatory (OVF), monthly inflation increased significantly, going from 1.7% in February to 10.5% in March.
That is the first increase since July 2021, as the inflation rate had fallen monthly. That period of consecutive decline lasted seven months and ended with the index recorded in March 2022.
The annual inflation rate in Venezuela thus becomes 251%, higher than in February when it stood at 246%. The items registering the highest increases are household equipment (105.9%), services (15.9%), communications (8.7%), and food (3.1%).
That indicates that the recently decreed salary increase has already deteriorated due to the price rise occurring in March. The OVF stated Venezuelans would need almost ten minimum wages to buy basic food after the new inflation record.
Of course, that situation affects each individual differently depending on how much they earn. However, the OVF said the food basket in Venezuela costs USD 370, while the average salary in the private sector is USD 108.7.
According to the organization, not even the average earnings of Venezuelans are enough to buy the food basket. Among those with the highest salaries are managers (USD 234.7), professionals and technicians USD (152.7), and workers (USD 100).
The US Dollar Does Not Help Store Value, but Bitcoin Does
The new inflation index occurred while the exchange rate appreciated, affecting those who had saved US dollars as reserves. The US dollar exchange rate went from VED 4.63 in February to VED 4.50 in March, a drop of 2.8%.
For that reason, the OVF commented that anchoring the US dollar is not enough to lower inflation permanently. That affects even those earning salaries in US dollars in Venezuela, as the increase in product prices is in the foreign currency.
The price of Bitcoin rose from USD 43,300 in late February to USD 45,100 at the end of March. The Venezuelans that bought the cryptocurrency in that period received a 4% profit, but those who kept US dollars suffered a 2.8% loss.
Although Bitcoin did not overcome the last monthly inflation of 10.5% recorded in Venezuela, it allowed facing the 3.1% that food suffered. It is relevant to recall that this asset is highly volatile and usually falls sharply but appreciates in the long run.
It is vital to be careful when storing savings in BTC or any other valuable asset to hedge against inflation in Venezuela.
Bitcoin is trading at around USD 44,274 and has accumulated a 3.5% loss over the last 24 hours. Its daily trading volume is above USD 32.56 billion, and its market capitalization is about USD 841.41 billion, according to CoinGecko.
By Alexander Salazar
