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High food prices continue to drive acute food insecurity

  • Key Message Update
  • Venezuela
  • July 2023
High food prices continue to drive acute food insecurity

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  • Key Messages
  • Key Messages
    • The limitations on households' financial access to food continue to result in Stressed (IPC Phase 2) acute food insecurity outcomes at the state level in Venezuela. Most households typically have several income sources in VED and USD, have access to social programs, and are able to receive remittances. However, millions of poor households within these areas likely have food consumption gaps indicative of Crisis (IPC Phase 3). These poor households are concentrated in peri-urban areas, especially in Zulia and Caracas, and tend to earn most of their income in local currency (the digital bolivar (VED)) and lack access to social protection benefits or remittances. Despite the recent increase in the value of the Cesta Ticket and the Bono Contra la Guerra Económica (Economic Crisis Benefit), total income earned by poor households in VED does not typically cover the monthly increase in the cost of food. Consequently, they have low purchasing power, which limits their access to food.
    • Some improvement in the level of acute food insecurity is expected between October and January. As is typical, economic activity increases due to the distribution of double salaries in both the public and private sectors and the seasonal increase in safety net program benefits around Christmas. These factors usually have indirect benefits for poor households working in the informal sector, as the increased demand for goods and services provides them with more income to purchase their basic food and non-food needs. As a result, the number of households in Crisis (IPC Phase 3) will likely decline, but large populations will likely remain Stressed (IPC Phase 2) given the broader context of recovery from the peak of Venezuela’s economic crisis.
    • Between May and June, the VED lost 6.7 percent of its value due to the reduction of the dollar (USD) supply in the foreign exchange market. The recent expansion of public spending this year allocated funds to cover the increase decreed to the Cesta Ticket, the Bono Contra la Guerra Económica, and the Unidad Tributaria (UT), which is used to calculate utility rates and taxes. These additional public expenditures, together with the depreciation of the local currency, contributed to an increase in headline inflation of 6.2 percent and food inflation of 5.2 percent in June with respect to May. Compared to June 2022, headline and food inflation rates were 404 and 321 percent higher, respectively, which continues to limit the purchasing power of the poorest households. In contrast, households earning and purchasing in dollars are subject to lower levels of inflation and have more stable purchasing power.
    • Venezuela's limited domestic fuel production continues to affect availability and result in fuel price increases, which is in turn affecting agricultural production costs during the planting season for small farmers. In June, crude oil production increased by 3.5 and 13.6 percent over May 2023 and June 2022, respectively, but local fuel (gasoline and diesel) supplies decreased between June and May due to the ongoing deterioration in local refining infrastructure. Gasoline production decreased from 90,000 to 35,000 barrels per day, limiting transportation and retail trade. Diesel also felt the effects. Fuel prices are expected to continue to increase, pending the recovery of production at local refineries. Although small crop producers will be affected, medium and large crop producers have the resources to cope with the increase in production costs.
    • Markets remain well supplied with imported and locally produced food. During 2023, food imports, particularly of staple grains, have remained stable. However, both VED and USD prices are trending above the five-year average, with USD prices affected by high global food prices and rising fuel and transportation costs. From May to June, prices in VED were stable, except for rice and substitutes, which increased by 5 to 10 percent; meanwhile, food prices ranged from 260 to 555 percent above the same time period in 2022. Prices in USD remained stable between May and June, but the prices of preferred staple foods increased between 10 and 20 percent compared to last year, while the prices of less expensive substitutes increased between 10 and 40 percent compared to last year.

    Recommended citation: FEWS NET. Venezuela Key Message Update July 2023: High food prices continue to drive acute food insecurity, 2023.

    This Key Message Update provides a high-level analysis of current acute food insecurity conditions and any changes to FEWS NET's latest projection of acute food insecurity outcomes in the specified geography. Learn more here.

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