Venezuela enters hyperinflation amid fears of growing shortages

Consumer prices in Venezuela have jumped 1,369% this year as the economy officially hurtles into hyperinflation.

The monthly inflation rate rose to 56.7% in November and is on track to exceed 2,000% on an annual basis in 2017, the opposition-controlled national assembly said in a statement.

"It is a record because it represents the highest inflation in the history of Venezuela and the world at this time," the legislative body said.

The national assembly began publishing its own inflation data after the central bank stopped releasing official figures last year amid the OPEC nation's worst recession on record.

Analysts blame Venezuela's runaway inflation on dwindling oil revenue, strict foreign exchange controls and reckless money printing that has rendered the local currency almost worthless.

Economists usually agree that a 50% month-on-month rise in consumer prices is the threshold for hyperinflation.

The national assembly warned the trend would lead to "greater impoverishment of the Venezuelan people, difficulties in acquiring food and confusion in the search for alternative means to perform transactions."

In October, the International Monetary Fund said Venezuela's inflation rate would hit 2,349.3% in 2018, the highest of any country on its database.

GDP would contract 6% next year after shrinking 12% in 2017, dragged down by a deepening political crisis, the IMF said in its World Economic Outlook report.

DOWNWARD SPIRAL

Meanwhile, London-based BMI Research said that Venezuela's macroeconomic crisis would continue to afflict the banking and financial services segments "for the foreseeable future."

"Deeply negative real interest rates, falling deposits and low confidence in the sector will present headwinds until significant changes are made to policies in Venezuela," Fitch Group's research arm said in a client note.

"We expect Venezuela's banking and financial services sector will remain the weakest in Latin America in the quarters ahead, a product of the economy's downward spiral, regular government intervention and poor transparency. The sector has essentially ceased to function, as deeply negative real interest rates and a lack of investment opportunities in the country prevent it from efficiently allocating capital in the economy," it added.

In related news, Venezuela's newly appointed oil minister, major general Manuel Quevedo, said on Thursday that state oil company PDVSA aimed to raise production by 1Mb/d following a new restructuring plan.

He provided no details of how the ramp-up would be financed or where the additional output would come from.

Quevedo replaced both Nelson Martínez as head of PDVSA and Eulogio del Pino as energy minister on November 28, strengthening the military's growing influence in President Nicolás Maduro's administration.

Martínez and del Pino were arrested three days later as part of the government's purge of oil sector officials for alleged graft.