Inflation has become a problem in América after a decade of relatively slow growth in the prices of most items Americans frequently buy. New data show that the inflation rate in the United States has picked up and has reached 6.2% in October 2021. That is still a far cry from the rate in Venezuela, the country with the highest inflation in the world.
By 24/7 Wall St – Douglas A. McIntyre
Nov 27, 2021
The new University of Michigan Survey of Consumers showed inflation uncertainty reached a four-decade high. This will almost certainly affect consumer spending. People who worry about inflation wonder what will happen to the costs of everything from food to mortgages. One offsetting factor is that wages are also rising. Wages recently jumped at a record pace.
Would rapidly rising wages cause people to buy more? Ironically, that depends on how much people are worried about inflation.
Inflation in the United States is tame by the standards of other countries. The inflation rate in Venezuela is 1,575% (October). The next highest nation is well below that. The inflation rate in Sudan is 366% (September). (This is how much a meal at McDonald’s costs around the world.)
Venezuela’s inflation rate has destroyed its economy. The problems are not new. According to Trading Economics, the country first hit hyperinflation in 1979. People cannot even buy basic goods now. News reports show prices in supermarkets marked in dollars and people struggling to afford and buy anything. At one point, the highest denomination bill in the country was for 1 million Venezuelan bolivares.
Among the reasons inflation is so high in the country is a lack of goods. The economy has been so badly crippled that production of almost everything has cratered. To offset this, the government printed more currency. As people converted their money assets into dollars, the price of the bolivar rose further.
As a result of high inflation and poor economic conditions, 3 million people have left the country. That is 10% of the population. (This state had the biggest population drop in the past 10 years.)
Venezuela overhauled its currency this October, wiping six zeros, in order to facilitate transactions and accounting. This is the second overhaul in three years.
Some problems have ready solutions. Others appear to have no solution at all. For the time being, inflation in Venezuela falls into the second category.
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