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The relative improvement in economic conditions betters access to food

  • Key Message Update
  • Venezuela
  • November 2023
The relative improvement in economic conditions betters access to food

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  • Key Messages
  • Key Messages
    • Seasonal improvements to income and in the stability of food prices as well as bettered macroeconomic indicators have had a positive impact on households' access to food. In addition, households receiving income in USD are protected against the most severe forms of inflation. While Stressed (IPC Phase 2) food security outcomes are expected to persist in the Capital District and most states due to purchasing power constraints, fewer households are expected to be in Crisis (IPC Phase 3) through January. Areas of concern include peri-urban and rural areas of the Capital District, Guárico, and the states bordering Colombia including Zulia, Apure, and Táchira.
    • The recent stability in macroeconomic conditions has helped improve access to food for poorer households that receive income in local currency (VED) and are more vulnerable to price fluctuations. Since May, the improvement in USD supply – as a result of Chevron's export revenues, increased government revenues, and Central Bank intervention – has improved the exchange rate and moderated inflation. The monthly inflation rate decreased (8.7 to 5.7 from September to October) and the annual rate remained stable (318 to 316 from September to October). Because of inflationary stability, the cost of a basic, diversified diet remained stable in VED for the fifth consecutive month. In addition, the price of pasta – a preferred staple food – decreased in USD (-5.2 percent month-on-month and -20 compared to October 2022) due to the availability of imports and local production. Despite these month-on-month improvements, food prices in USD and VED remain above those of last year and the five-year average. 
    • VED inflation is expected to continue increasing through the end of 2023, albeit at a slower pace. Síntesis Financiera expects foreign currency supply to improve with General Licenses 44 and 43 – part of the U.S. sanctions relief program – allowing six months of crude oil, gas, and gold mining transactions. A slight depreciation of the VED against USD is forecasted between November and December (38 to 39.41 percent), moderated by bank interventions, and increasing demand for VED to pay taxes. As a result, food prices in both VED and USD will remain stable month-on-month. 
    • The government continues to adjust the Social Protection System bonuses and the amount of Cesta Ticket based on the current exchange rate, supporting improved purchasing power for poor households. In particular, the Cesta Ticket value increased to 1,389 VED in October, an increase of 40 percent since the decree in May (when it was 1,000 VED) and six percent since September (when it was 1,312 VED). Increased government revenues from oil sales will likely moderate the impact of increased public spending on inflation.
    • Despite average rainfall since October, above-average temperatures will result in continually low soil moisture, negatively affecting yields of smallholder farmers without access to irrigation systems at the start of the second corn planting season, particularly in the Central Plains area. However, this will not affect national production: corn production is expected to grow by 37 percent and rice production by 25 percent over 2022/23, according to USDA, due to increased planted areas, access to inputs, bettered agricultural practices, and favorable prices.  

    Recommended citation: FEWS NET. Venezuela Key Message Update November 2023: The relative improvement in economic conditions betters access to food, 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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