Amid tensions with US, high inflation is back on Venezuela’s streets

By Stefano Pozzebon, CNN

Caracas, Venezuela (CNN) — As Venezuelan President Nicolas Maduro faces growing US military pressure and calls for his resignation, an old foe is returning to haunt him in his own backyard: Inflation, one of Venezuela’s chronic economic maladies, is on the rise again.

“Prices are growing every day,” said Yon Michael Hernandez, 25, a motorcycle taxi driver in the slum of Petare, east of Caracas.

“Corn flour is 220 bolivars today, it may be 240 tomorrow and 260 the day after, and the same package that might have cost you one dollar 15 days ago is worth three now,” Hernandez told CNN. He referred to the Venezuelan currency and to the pre-cooked flour used to make arepas, the ubiquitous corn pancakes that are a daily staple.

In the three months since the Pentagon deployed warships and aircraft in a campaign that the White House said was aimed at drug traffickers from Venezuela, the bolivar has depreciated around 70% against the US dollar, according to data from the central bank, hemorrhaging one point every day.

In the illegal but widely used currency black market, the drop has been just as steep. At the official rate, the US dollar is pegged at about 231 Venezuelan bolivars. On the black market, a dollar is worth roughly a third more. The Venezuelan government prohibits publishing black market exchange rates.

The surge in inflation is linked – although only partially – with the growing tensions between the Trump administration and the Maduro government, which has been under US Treasury Department sanctions for almost a decade.

Maduro has accused the United States of seeking to oust him after more than 12 years in power and one year after he controversially claimed to win a presidential election that many international observers accused him of stealing.

While a military attack on Venezuelan soil may not materialize, the economic outlook is firmly in the red once again, after a change of policies gave the country a much-needed boost in the years immediately after the Covid-19 pandemic.

Only last year, Maduro boasted about the results of those reforms, claiming his country’s GDP was growing at 8% and that inflation was at the lowest rate in four decades. The autocratic leader no longer makes such claims.

According to the United Nations, Venezuela historically does not produce enough food to meet its needs, and many products must be imported from abroad and paid for in foreign currencies.

This also means the market is particularly exposed when the bolivar loses value.

For many Venezuelans, still reeling from years of hyper-inflation before the pandemic lockdowns, the new price hikes revive a familiar nightmare.

“Not many people are purchasing these days. Those who can try to buy as little as possible,” said Marjorie Yanez, 40, a street-food seller in Caracas. “Dollars get more expensive every day, and that is bad for retailers like us because we also must raise our prices every day.”

A typical breakfast of croissant and café con leche now can easily cost the equivalent of $8 to $10 at a bakery in Caracas, while the country’s official minimum wage is less than a dollar a month.

The stream of remittances from relatives abroad, a consequence of more than 7 million Venezuelans fleeing the country under Maduro to look for better opportunities elsewhere, is also falling short.

“I had to increase how much I send back to my parents every month, but even with that, it’s not enough. They can barely make ends meet,” said Diego Mejias, 35, an architect in neighboring Colombia who provides for his parents in Caracas.

War on inflation, one detention at a time

The central bank stopped publishing inflation reports in October last year, when the country had managed to keep the rate at single digits for 20 straight months.

Shortly afterward, things began to unravel.

In July, Venezuelan security forces briefly detained several economists, including former finance minister Rodrigo Cabezas, for sharing pessimistic views. The interior minister called their comments destabilizing. Critics denounced the arrests as baseless.

The economists were later released, but publishing economic figures remains taboo.

For this report, CNN spoke with two private consultants who have access to reliable economic data. Both spoke anonymously for fear of government retaliation.

CNN has also contacted Vice President Delcy Rodriguez, who is in charge of Venezuela’s finances, and is waiting for a response.

Both consultants estimated that inflation in Caracas is currently running between 20% and 30% a month and is destined to keep rising as long as the bolivar depreciation continues.

Prices are slightly cheaper outside the capital in regions such as Tachira or Zulia, closer to the Colombian border, where many imported products cross into Venezuela.

Faced with the economic malaise, the government has cracked down on the black market for US dollars. In June, Attorney General Tarek William Saab announced the detention of 58 people on charges of “manipulating exchange rates.” Authorities also seized a dozen web pages advertising the sale of dollars and euros at rates different from the official one by the central bank.

The moves have done little to stop the bolivar’s fall.

Several causes

Last month, the International Monetary Fund estimated Venezuela’s annual inflation at about 270%, the highest in the world and a sharp increase from the 180% rate it estimated in April.

For 2026, the outlook is even bleaker. The IMF forecasts Venezuela’s inflation to top 600% by next October.

The bolivar’s plunge can be partially explained by the US military’s show of force, as nervous Venezuelans seek to purchase hard currency as a hedge against an uncertain future. But that is only one of the causes, the consultants told CNN.

US sanctions against the Venezuelan oil sector, which is the nation’s largest source of foreign exchange by far, are also partially to blame.

In July, the Trump administration renegotiated a license authorizing Chevron, a major US oil company, to export Venezuelan crude. Under the new terms of the license, Chevron was authorized to pay fees and royalties to Venezuela in oil but not in cash, effectively reducing Chevron’s crude exports from the country by half, according to Reuters.

CNN contacted Chevron for comment but has not received a response.

The change has proved costly because Venezuela lost one of its few remaining sources of legitimate income. As a result, the government is now forced to sell even more oil on the black market at a discount to evade US government sanctions, one of the economists in Caracas told CNN.

The future is crypto

To make up for the missing income, the government recently allowed private companies to sell cryptocurrencies in exchange for the depreciated bolivar, with exchange houses openly supported by a new crypto-managing regulator, the National Superintendence of Crypto Assets, known as Sunacrip.

Last year, Reuters reported that the government was preparing to increase usage of crypto assets in its oil exports to overcome the US sanctions. According to the specialized data collector Chainanalysis, Venezuela is second only to Brazil for crypto adoption rates in Latin America.

Today, thousands of Venezuelans – from corporate bankers to retirees – regularly purchase US dollars on Binance, the world’s largest crypto exchange. It is even common to see shoppers at grocery stores trading currencies in the checkout lines.

Not everyone has embraced the new normal. “Sending money to Venezuela has always been a mess,” said Mejias, the architect in Colombia. “Now it’s even more confusing to understand what rate is good and what is not, and for old people like my parents, even more.”

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