Venezuela faces unprecedented inflationary crisis: inflation reaches 556% amid external economic pressures

The economic crisis facing Venezuela has reached critical levels. According to Bloomberg data compiled up to December 17, inflation in the Caribbean country registers an annualized rate of 556%, a figure that reflects an accelerated deterioration of the local currency and the cost of living.

Accelerated inflation trend

The inflation outlook has experienced relentless worsening. Compared to the 219% recorded at the end of June this year, inflation has more than doubled in just six months. For the entirety of 2024, the rate stood at 45%, meaning that most of the increase was concentrated in the second half of the fiscal year.

Since Bloomberg launched this index in 2016, Venezuela has witnessed recurrent episodes where the annualized inflation has exceeded 100,000%, demonstrating the structural magnitude of the economic imbalance facing the nation.

Dollarization as an economic survival mechanism

In this scenario of monetary erosion, approximately 90% of private sector workers have chosen to receive their wages in US dollars. This reality reflects a loss of confidence in the national currency and shows how economic agents seek to protect themselves from the collapse of purchasing power.

Informal dollarization of salaries has become an escape valve for millions of Venezuelans trying to preserve the value of their income amid constant depreciation.

External pressures intensify the crisis

International financial restrictions have worsened internal economic volatility. The isolation of capital markets has limited Venezuela’s ability to stabilize its currency and access financing mechanisms, thereby deepening the inflationary cycle that currently characterizes the Venezuelan economy.