Tag Archives: Inflation

Fed likely to leave support in place for struggling U.S. economy

By Howard Schneider

WASHINGTON (Reuters) – The Federal Reserve is expected to keep monetary policy locked in crisis-fighting mode on Wednesday as the U.S. central bank assesses an economy still struggling through the shock of a pandemic but looking forward to relief from a vaccination campaign and another government aid package.

The Fed, which will release its latest policy statement at 2 p.m. EST (1900 GMT), has used its recent meetings to roll out significant changes, linking any future increase in interest rates to a persistent rise in inflation, and tying any change in its $120 billion in monthly bond purchases to “substantial further progress” on its employment and inflation targets.

If anything, economic data since Fed officials met in the middle of December has been disappointing, and analysts say policymakers will likely fend off any suggestion that the economic boost from vaccines or a possible surge in inflation this spring will cause them to waver on the promise of continued loose monetary policy.

Major U.S. stock indexes were down about 1% in mid-morning trading, with analysts attributing the fall to concerns that vaccinations may not roll out as fast – or allow the economy to reopen as soon – as initially expected.

U.S. bond yields also dropped and a measure of longer-term market inflation expectations fell towards the Fed’s 2% target after a recent rise, evidence the recovery has not gained full traction and a pullback that, if sustained, would worry the central bank.

Kathy Bostjancic, chief U.S. financial economist at Oxford Economics, said she, like many economists, anticipates a “mini-boom” beginning in the spring as more of the U.S. population is vaccinated against the virus, people feel freer to travel and spend, and the Biden administration’s own spending plans move forward.

About 25 million people had received at least one of the required two doses of vaccine as of Sunday, and President Joe Biden hopes to boost the pace of daily shots to 1.5 million. He has requested an additional $1.9 trillion in government spending to speed up the vaccinations and expand benefits to U.S. businesses, workers and families hard hit by the pandemic.

Though that could fuel faster economic growth, Fed Chair Jerome “Powell will maintain his dovish tone for now,” by noting that inflation remains below the central bank’s 2% annual target and employment is still about 10 million short of its pre-pandemic level, Bostjancic wrote.

Powell is scheduled to hold a news conference half an hour after the release of the policy statement.

INFLATION TALK

Since approval of the first coronavirus vaccines in December, Fed officials have shared a general view that the U.S. economy was likely entering what one called the “endgame” of the pandemic, marked by short-term risks but likely buoyant growth in the second half of the year.

Fed policymakers, however, also have noted the large hole left in the economy, particularly the job market, after a year in which activity crashed spectacularly and then only partially rebounded. The United States actually lost jobs in December.

Many of the steps the Fed took last spring in response to the onset of recession, including slashing interest rates to zero, are now expected to remain in place for a potentially extended period of time – with policymakers not anticipating the need to raise rates for perhaps three years.

That’s designed to help push the economy onto a path of both higher employment and one that meets, after years of misses, the central bank’s 2% inflation goal.

Investors appear to have taken the Fed’s higher inflation talk seriously. The expected inflation rate over the longer term as measured by Treasury securities indexed for inflation has moved above 2%. Fed officials also have begun laying the foundation to ignore what’s expected to be a spike in prices this spring and summer, spurred by faster economic activity but also distorted by comparison to weak prices last year.

“The rebound in market-based inflation compensation measures will not alarm the Fed,” said Paul Ashworth, chief U.S. economist for Capital Economics. “Instead, Fed officials are more likely to view the rise as a welcome vindication of the tweaks they made to the policy framework.”

(Reporting by Howard Schneider; Editing by Andrea Ricci and Paul Simao)

U.S. factory activity races to more than 13-1/2-year high in early January: IHS Markit

WASHINGTON (Reuters) – U.S. manufacturing activity surged to its highest level in more than 13-1/2-years in early January amid strong growth in new orders, but bottlenecks in the supply chain caused by the COVID-19 pandemic are driving up prices and signaling a rise in inflation in the months ahead.

Data firm IHS Markit said on Friday its flash U.S. manufacturing PMI accelerated to a reading of 59.1 in the first half of this month, the highest since May 2007, from 57.1 in December. Economists had forecast the index slipping to 56.5 in early January.

A reading above 50 indicates growth in manufacturing, which accounts for 11.9% of the U.S. economy. Manufacturing is being supported by businesses rebuilding inventories and a shift in demand towards goods from services because of the coronavirus crisis. Factories and the housing market are anchoring the economy as it battles a resurgence in the virus.

The IHS Markit survey’s measure of new orders received by factories raced to its highest level since September 2014. The surge in demand reflected both existing and new customers, “with some clients reportedly committing to orders previously placed on hold.”

But the pandemic is gumming up the supply chain, leading to higher prices for materials.

Manufacturers are also raising prices for their products. The survey’s gauge of prices received by factories vaulted to its highest level since July 2008. This mirrored other manufacturing surveys, suggesting inflation could pick up and remain elevated beyond the anticipated boost from the drop of weak readings in March and April from the calculation.

With orders soaring, manufacturers hired more workers early this month. The survey’s factory employment index increased to 54.8 from 52.2 in December.

The strength in manufacturing helped to lift business activity. The survey’s flash composite PMI Output Index, which tracks the manufacturing and services sectors, rose to a reading of 58.0 early this month from 55.3 in December. While its flash services sector PMI increased to 57.5 from 54.8 in December, the pace of new business growth softened at the start of 2021.

The services sector, which accounts for more than two-thirds of U.S. economic activity, has borne the brunt of the pandemic, with severe disruptions to restaurants, bars and other businesses that attract crowds. COVID-19 has infected more than 24 million people, with the death toll exceeding 400,000 since the pandemic started in the United States.

The survey’s measure of services industry employment fell to a six-month low in early January.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)

Fed’s Bullard sees inflation rising, mum on QE taper

By Howard Schneider

(Reuters) – All signs are pointing to a rise in U.S. inflation, St. Louis Federal Reserve President James Bullard said on Wednesday, but though the economy may boom later this year, it’s too early to say when the Fed could take any steps to pull back on its super-easy policy.

The money supply has “exploded,” fiscal deficits are “off the charts” and a hot economy may either already be here or “just around the corner,” Bullard said in an interview at the Reuters Next conference.

And with vaccines going first to the elderly and others who are most at risk of dying from COVID-19, he said, daily deaths – now likely near their peak – will drop. “You are going to see that’s going to have big ramifications for the economy” as people worry less about the risks, he said.

“I don’t think there will be a spectacular date when you can say, ‘All clear.'” Bullard said. “I think what will happen is the disease will be less deadly…the virus is going to run out of victims.”

Still, Bullard said, labor markets still have a “long way to go” before they are healed. And even with inflation set to rise, the Fed won’t preemptively tighten policy in response. Inflation has underrun the Fed’s 2% target for the last decade, and has pledged to allow it to exceed 2% for some time to reestablish its credibility.

The Fed has kept rates near zero since last March and has signaled it will keep them there for years to give inflation time to do just that. The central bank has also vowed to keep buying Treasuries and mortgage-backed securities at its current pace of $120 billion a month until it sees “substantial” further progress toward its goals of full employment and price stability.

While a couple Fed policymakers have said they could see that bar being met later this year, Bullard said Wednesday he still needs to see how things develop.

“Labor markets have improved dramatically but still have a long way to go… you still need unemployment to drop, jobs to come back… certain sectors have really been hard hit and for them to come back we are going to have to get this vaccine rolled out,” he said. For the economy as a whole, “it’s possible you get a boom… but let’s wait and see if that actually happens.”

(Reporting by Howard Schneider and Ann Saphir; Editing by Chizu Nomiyama)

Lebanon tightens lockdown, imposes 24-hour curfew, as hospitals buckle

BEIRUT (Reuters) – Lebanon announced a tightening of its lockdown on Monday, introducing a 24-hour curfew from Thursday as COVID-19 infections overwhelm its medical system.

The new all-day curfew starts at 5 a.m. (0300 GMT) on Thursday and ends at 5 a.m. on Jan. 25, a statement by the Supreme Defense Council said.

Lebanon last week ordered a three-week lockdown until Feb. 2 that included a nighttime curfew from 6 p.m. to 5 a.m.  But tighter measures were now necessary as hospitals run out of capacity to treat critically ill patients, President Michel Aoun said in the statement. “We have seen dreadful scenes of citizens waiting in front of hospitals for a chair or a bed,” he said.

The new measures also include stricter procedures at the airport for passengers arriving from Cairo, Addis Ababa, Baghdad, Istanbul and Adana. Travelers arriving from these destinations will have to quarantine for seven days at a hotel while all others will quarantine up to 72 hours. Overall air traffic at the airport will also be cut to 20% from normal operating levels and supermarkets will be limited to delivery services.

Anticipation of stricter measures on Monday had driven many Lebanese to wait in long queues in front of supermarkets and empty shelves.

Lebanon registered 3,743 new infections on Sunday, bringing its total to 219,296 cases and 1,606 deaths since Feb. 21.

Adherence to social distancing and other preventive measures has been lax prompting government fears of a significant rise in cases after the Christmas and New Year holidays.

Daily infections reached an all time high of 5,440 on Friday.

“Sadly we are being faced with a frightening health situation,” Caretaker Prime Minister Hassan Diab said. “The corona pandemic is out of control because of the stubbornness of people and their rebellion against measures we take to protect them from its dangers.”

The lockdown faces resistance amid concerns over soaring unemployment, inflation and poverty.

Lebanon is still dealing with a devastating financial crisis that has crashed the currency, paralyzed banks, and frozen savers out of their deposits.

Medical supplies have dwindled as dollars have grown scarce.

(Reporting By Maha El Dahan and Laila Bassam; Editing by Toby Chopra)

Fast take: U.S. consumer inflation muted, just don’t buy a used car

By Dan Burns

(Reuters) – U.S. consumers on balance paid only a little bit more for goods and services last month as supply chain disruptions that contributed to a bump up in inflation over the summer began to ease, a welcome respite for the millions who remain unemployed.

While that easing pressure on pinched consumers might offer a benefit to Republican President Donald Trump’s reelection prospects against Democratic challenger Joe Biden, it does come with a big “on the other hand” caveat: It is the latest sign of fading momentum in the rebound from this spring’s record-setting economic slump.

A bit of inflation typically is an indication of strengthening demand, an encouraging signal that consumers have reliable sources of income allowing them to contribute to growing an economy that hinges extensively on their spending. But with roughly 11 million still out of work and desperate for a new round of COVID-19 relief from Washington, September’s modest uptick in prices is no such signal.

Here’s Jefferies chief financial economist Aneta Markowska’s take: “After several months of above-trend gains, price pressures are finally normalizing. Both headline and core CPI increased by just 0.2% (month-to-month) in September, with the underlying details painting an even weaker picture.”

In fact, she notes prices would have been unchanged but for one thing: The largest monthly increase in used car and truck prices since 1969. And with cash-strapped consumers increasingly reliant on their own transport to get to an on-site job, that’s no welcome development.

Food price increases, too, are moderating after a big run up in the spring, but where you eat makes a big difference.

If eating at home, as millions without work have no choice but to do, then food prices were lower for a third straight month.

If eating out, though, as more consumers are doing as restaurants continue to reopen around the country, prices shot up by the most in 12 years last month.

(Reporting by Dan Burns; Editing by Andrea Ricci)

Fed faces tougher task in deciding whether to cut U.S. rates

The Federal Reserve building is pictured in Washington, DC, U.S., August 22, 2018. REUTERS/Chris Wattie/

By Trevor Hunnicutt

NEW YORK (Reuters) – U.S. employers are hiring workers at a brisk pace, but that is only making the Federal Reserve’s job harder.

On Friday, the Labor Department said nonfarm employers added 224,000 jobs last month – the most in five months, and not the kind of labor market that would normally cause policymakers at the U.S. central bank to cut interest rates.

But the Fed opened up the possibility of cuts last month, citing muted inflation pressures and an economic outlook clouded by a U.S. trade war and slower global growth.

This complicates a debate Fed policymakers are having over whether the economy needs stimulus, setting up a possible standoff with markets at their July 30-31 meeting.

“They are in a bit of a bind,” said Karim Basta, chief economist at III Capital Management. “On the surface, the data, in my opinion, doesn’t really support an imminent cut, but markets are expecting it, and I do think there’s a risk at this stage that they disappoint.”

Markets are overwhelmingly betting the Fed’s next move will be its first rate cut since the financial crisis a decade ago, and President Donald Trump on Friday renewed demands for lower rates to strengthen the economy.

Fed Chairman Jerome Powell has repeatedly said the central bank makes decisions independently from both markets and the White House, but failing to deliver a cut could cause a stock and short-term bond selloff and reduce economic activity.

U.S. interest rates futures fell after the jobs report on Friday. Markets still see a rate cut this month as a near-certainty, though they largely priced out changes for an aggressive half-percentage-point cut.

“These are good numbers, but a rate cut in July is still all but inevitable,” said Luke Bartholomew, investment strategist for Aberdeen Standard Investments. “Employment growth remains a bright spot amid a fairly mixed bag of U.S. data and yet markets have come to expect a cut now so (they) will fall out of bed if they don’t get one.”

The U.S. has not resolved its trade dispute with China, but the two countries agreed last weekend to resume trade talks, putting off new tariffs.

There are still signs of a pullback in economic activity. Businesses’ spending on machines and other equipment is tepid, but employers keep hiring hotel maids, electricians, daycare providers and other workers. They are also paying them more. Average hourly earnings rose at a 3.1%-a-year pace. A May payroll gain of 72,000 now seems like a fluke rather than a sign of deterioration.

Those are not the prototypical conditions for a rate cut. Unemployment at 3.7% is near its lowest levels since 1969 and policymakers have traditionally seen job gains with low unemployment posing risks of inflation.

But economists have grown less confident in academic models that forecast an inverse relationship between unemployment and inflation. The core personal consumption expenditures index is running at 1.6% a year, short of the Fed’s 2% goal.

In its semi-annual report to Congress, the Fed on Friday repeated its pledge to “act as appropriate” to sustain the economic expansion, with possible interest rate cuts in the coming months, but notably said the jobs market had “continued to strengthen” so far this year, and described recent weak inflation as due to “transitory influences.”

Some policymakers think a rate cut could lift inflation expectations, reducing chances of more drastic rate cuts being needed later. With rates at 2.25%-2.50%, policymakers have less room to cut before they resort to unconventional measures.

A cut could also reduce the Fed’s firepower in the case of a more severe downturn and signal greater concern about the future and even that more stimulus is on the way.

(Reporting by Trevor Hunnicutt in New York; Additional reporting by April Joyner in New York and Howard Schneider in Washington; Editing by Jennifer Ablan and James Dalgleish)

Fed holds rates steady, signals cuts possible later this year

Federal Reserve Chairman Jerome Powell holds a news conference following a two-day Federal Open Market Committee meeting in Washington, U.S., June 19, 2019. REUTERS/Kevin Lamarque

By Howard Schneider and Jason Lange

WASHINGTON (Reuters) – The U.S. Federal Reserve held interest rates steady on Wednesday but signaled possible rate cuts of as much as half a percentage point over the remainder of this year, as it responded to increased economic uncertainty and a drop in expected inflation.

The U.S. central bank said it “will act as appropriate to sustain” the economic expansion as it approaches the 10-year mark and dropped a promise to be “patient” in adjusting rates. Nearly half its policymakers now show a willingness to lower borrowing costs over the next six months.

While new economic projections showed policymakers’ views of growth and unemployment largely unchanged, they saw headline inflation at just 1.5 percent for the year, down from the 1.8 percent projected in March.

They also expect to miss their 2 percent inflation target next year as well.

Seven of 17 policymakers said they expected it would be appropriate to cut rates by half of a percentage point by the end of 2019, and an eighth saw a rate cut of a quarter point as appropriate.

That was not enough to change the median outlook for the Fed’s targeted overnight lending rate, which officials projected to remain in a range of between 2.25% and 2.50% for the rest of this year.

But it still represented a significant shifting of views on the Fed. It appeared many, and perhaps most, policymakers trimmed a full half percentage point from their outlook for rates. Only one policymaker continues to see a rate hike as likely in 2019.

The long-run federal funds rate, a barometer for the state of the economy over the long term, was cut to 2.50% from 2.80%.

U.S. stocks turned higher after the Fed’s statement was released, with the benchmark S&P 500 up about 0.25% from the previous day’s close. Ahead of the statement, stocks had been fractionally lower on the day.

Yields on U.S. Treasury securities, which had been modestly higher before the rate decision was released, slipped. The 10-year Treasury note yield was down 1 basis point at just shy of 2.05%. The dollar weakened against the euro.

Along with the change in the policy statement, Wednesday’s projections open the door for the central bank to lower rates in short order if the economy weakens, or U.S. trade disputes with China and other nations escalate.

The Fed continued to regard the labor market as “strong” and said “sustained expansion of economic activity” and eventually rising inflation were still “the most likely outcomes.” The drop in inflation, however, was a blow for a central bank hoping to reach its target sometime next year.

Fed Chairman Jerome Powell will hold a press conference at 2:30 p.m. EDT (1830 GMT) to elaborate on the results of the policy meeting, which was the first since President Donald Trump raised tariffs on $200 billion of Chinese imports and threatened, though ultimately decided against, imposing new tariffs on Mexican goods.

Those actions caused Fed officials to change their tone from largely dismissing the macroeconomic fallout of Trump’s trade policies to worrying that a new world order of persistent high tariffs and reordered global supply chains could be emerging.

St. Louis Fed President James Bullard, who had argued that rates should be cut, dissented in Wednesday’s policy decision.

(Reporting by Howard Schneider and Jason Lange; Editing by Paul Simao)

Muted U.S. inflation strengthens case for Fed rate cut

People tour The Shops during the grand opening of The Hudson Yards development, a residential, commercial, and retail space on Manhattan's West side in New York City, New York, U.S., March 15, 2019. REUTERS/Brendan McDermid

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. consumer prices barely rose in May, pointing to moderate inflation that together with a slowing economy increased pressure on the Federal Reserve to cut interest rates this year.

But the report from the Labor Department on Wednesday will likely not shift Fed officials’ views that temporary factors are behind the weak inflation readings. Airline fares, among the transitory factors identified by Fed Chairman Jerome Powell, rebounded and apparel prices stabilized after two straight monthly decreases.

U.S. central bank policymakers are scheduled to meet on June 18-19 against the backdrop of rising trade tensions, slowing growth and a sharp step-down in hiring in May that has led financial markets to price in at least two rate cuts by the end of 2019. A rate cut is not expected next Wednesday.

“This soft inflation backdrop reinforces our call for two (rate) cuts later this year,” said Michael Feroli, an economist at JPMorgan in New York. “We think next week is probably too soon to expect that action, given that growth is still holding in and trade-related risks remain two-sided.”

The consumer price index edged up 0.1% last month as a rebound in the cost of food was offset by cheaper gasoline, the government said. The CPI gained 0.3% in April.

In the 12 months through May, the CPI increased 1.8%, slowing from April’s 1.9% gain. May’s rise in the CPI was broadly in line with economists’ expectations.

Excluding the volatile food and energy components, the CPI nudged up 0.1% for the fourth straight month, the longest such stretch since April 2017. The so-called core CPI was held down by a sharp decline in the prices of used cars and trucks as well as motor vehicle insurance.

In the 12 months through May, the so-called core CPI rose 2.0% after advancing 2.1% in April.

U.S. Treasury prices were trading mostly higher, while the dollar was little changed against a basket of currencies. Stocks on Wall Street slipped as the rate-cut hopes were overshadowed by investor anxiety over the U.S.-China trade war.

GROWTH SLOWING

U.S. President Donald Trump in early May slapped additional tariffs of up to 25% on $200 billion of Chinese goods, prompting retaliation by Beijing. Trump on Monday threatened further duties on Chinese imports if no deal was reached when he meets Chinese President Xi Jinping at a G20 summit at the end of this month in Japan.

Economists have warned that the tariffs will undercut the economy, which will celebrate 10 years of expansion in July, the longest in history. Powell said last week the Fed was closely monitoring the implications of the trade war on the economy and would “act as appropriate to sustain the expansion.”

Data so far have suggested a sharp slowdown in U.S. economic growth in the second quarter after a temporary boost from exports and an accumulation of inventory early in the year. Job growth slowed sharply in May. Manufacturing production, exports and home sales dropped in April, while consumer spending cooled.

The Atlanta Fed is forecasting gross domestic product to increase at a 1.4% annualized rate in the April-June quarter. The economy grew at a 3.1% pace in the first quarter.

A survey of chief executive officers published on Wednesday showed unease about trade policy negatively impacting sales expectations as well as capital spending and hiring plans over the next six months.

The Fed’s preferred inflation measure, the core personal consumption expenditures (PCE) price index, increased 1.6 percent in the year to April after gaining 1.5% in March. Data for May will be released later this month. The core PCE price index has been running below the Fed’s 2% target this year.

Gasoline prices fell 0.5% in May after rising 5.7% in April. Food prices rebounded 0.3% in May after dipping 0.1% in the prior month. Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, increased 0.3% in May after rising 0.3% in April.

Healthcare costs increased 0.3%, matching April’s rise. That mirrored an increase in healthcare costs at the producer level, suggesting a pickup in the core PCE price index in May. There were gains in hospital and doctor fees. But prices for prescription medication fell 0.2%.

Apparel prices were unchanged in May after tumbling 0.8% in the prior month. They had declined for two months in a row after the government introduced a new method and data to calculate apparel prices. Economists expect the duties on Chinese goods to lift apparel prices in the coming months.

“That’s going to change with new tariffs on the way unless apparel companies can teach other nations to knit sweaters as well as Chinese workers can do,” said Chris Rupkey, chief economist at MUFG in New York.

Prices for used motor vehicles and trucks tumbled 1.4%. That was the largest drop since last September and marked the fourth straight monthly decrease. The cost of motor vehicle insurance fell 0.4%, the most since May 2007. The cost of recreation also decreased.

But prices for airline tickets rebounded 2.0% after falling for two straight months. Prices for household furnishings and new vehicles rose in May. Household furnishings prices are likely to trend higher in the coming months because of the duties on Chinese imports.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. producer prices post biggest rise in five months

FILE PHOTO: A customer shops for a turkey at a Walmart store in Chicago, Illinois, U.S., November 20, 2018. REUTERS/Kamil Krzaczynski/File Photo

WASHINGTON, (Reuters) – U.S. producer prices increased by the most in five months in March, but underlying wholesale inflation was tame.

The Labor Department said on Thursday its producer price index for final demand rose 0.6 percent last month, lifted by a surge in the cost of gasoline. That was the largest increase since last October and followed a 0.1 percent gain in February.

In the 12 months through March, the PPI rose 2.2 percent after advancing 1.9 percent in February. Economists polled by Reuters had forecast the PPI would climb 0.3 percent in March and increase 1.9 percent on a year-on-year basis.

A key gauge of underlying producer price pressures that excludes food, energy and trade services was unchanged last month after ticking up 0.1 percent in February. The so-called core PPI increased 2.0 percent in the 12 months through March. That was the smallest annual increase since August 2017 and followed a 2.3 percent rise in February..

Data on Wednesday showed consumer prices rose by the most in 14 months in March, driven by more expensive gasoline. But core inflation remained muted amid a plunge in the cost of apparel.

Slowing domestic and global growth are keeping inflation contained. Wage inflation has also been moderate despite a tight labor market.

Minutes of the Federal Reserve’s March 19-20 policy meeting published on Wednesday described inflation as “muted,” though officials expected it to rise to or near the U.S. central bank’s 2 percent target. The Fed’s preferred inflation measure, the core personal consumption expenditures (PCE) price index, is currently at 1.8 percent.

Last month, wholesale energy prices jumped 5.6 percent, with gasoline prices shooting up 16.0 percent, the most since August 2009. Energy prices rose 1.8 percent in February.

Gasoline accounted for over 60 percent of the 1.0 percent rise in goods prices last month. Goods prices increased 0.4 percent in February.

Wholesale food prices rose 0.3 percent in March, reversing a 0.3 percent drop in the prior month. Core goods prices rose 0.2 percent after edging up 0.1 percent in February.

The cost of services increased 0.3 percent in March after being unchanged in the prior month. Prices for healthcare services fell 0.2 percent last month. There was a sharp drop in the cost of hospital outpatient services. Those healthcare costs feed into the core PCE price index.

(Reporting by Lucia Mutikani Editing by Paul Simao) ((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters Messaging: lucia.mutikani.thomsonreuters.com@reuters.net)

Malnourished Venezuelans hope urgently needed aid arrives soon

Yaneidi Guzman, 38, poses for a picture at her home in Caracas, Venezuela, February 17, 2019. REUTERS/Carlos Garcia Rawlins

By Carlos Garcia Rawlins and Shaylim Valderrama

CARACAS (Reuters) – Yaneidi Guzman has lost a third of her weight over the past three years as Venezuela’s economic collapse made food unaffordable and she now hopes the opposition will succeed in bringing urgently needed foreign aid to the South American country.

Guzman’s clothes hang limply off her gaunt frame. The 38-year-old is one of many Venezuelans suffering from malnutrition as the once-prosperous, oil-rich OPEC nation has seen its economy halve in size over the last five years under President Nicolas Maduro.

Yaneidi Guzman poses for a picture next to her daughters, Esneidy Ramirez (R), (front L-R) Steffany Perez and Fabiana Perez, at their home in Caracas, Venezuela, April 22, 2016. REUTERS/Carlos Garcia Rawlins

Yaneidi Guzman poses for a picture next to her daughters, Esneidy Ramirez (R), (front L-R) Steffany Perez and Fabiana Perez, at their home in Caracas, Venezuela, April 22, 2016. REUTERS/Carlos Garcia Rawlins

Venezuelans’ diets have become ever more deficient in vitamins and protein, as currency controls restrict food imports and salaries fail to keep pace with inflation that is now above 2 million percent annually.

Growing malnutrition is one of the reasons Venezuela’s opposition leader Juan Guaido has moved ahead with his plans to bring supplies of food and medicine into Venezuela by land and sea on Saturday, despite resistance from Maduro.

Maduro, who denies there is a humanitarian crisis, has said it is a “show” to undermine him.

On Thursday, crowds cheered as Guaido led a convoy of opposition lawmakers out of Caracas on a 800-km (500 mile) trip to the Colombian border where they hope to receive food and medicine. Guaido has not provided details on how they would bring in the aid.

In response, Maduro denounced the aid, saying in televised comments that he was considering closing the border with Colombia and would close the border with Brazil.

Aid has become a proxy war in a battle for control of Venezuela, after Guaido in January invoked a constitutional provision to assume an interim presidency, saying Maduro’s re-election last year was fraudulent.

“I hope they let the aid in,” said Guzman, who despite holding down two jobs cannot make enough money for the tests, supplements or protein-rich diet that doctors have prescribed her. She and her husband make less than $30 per month and prioritize feeding their three young children.

Maria Guitia washes her son Yeibe Medina at home near San Francisco de Yare, Venezuela, February 18, 2019. REUTERS/Carlos Garcia Rawlins

Maria Guitia washes her son Yeibe Medina at home near San Francisco de Yare, Venezuela, February 18, 2019. REUTERS/Carlos Garcia Rawlins

While there is a vacuum of government information, almost two-thirds of Venezuelans surveyed in a university study called, “Survey on life conditions,” and published last year, said they had lost on average 11 kilograms (24 lbs) in body weight in 2017.

On the wall of Guzman’s home in the poor hillside district of Petare in the capital Caracas, hangs a wooden plaque with the psalm “The Lord is my shepherd, I lack nothing.”

Yet her fridge is empty except for a few bags of beans.

Sometimes she wakes up not knowing what she will feed her family that day. Mostly they eat rice, lentils and cassava.

While Guzman says she would welcome the aid, she is concerned the one-off shipment would be a drop in an ocean given Venezuelans’ needs. “You don’t only eat once,” she said.

Some political analysts say Saturday’s showdown is less about solving Venezuela’s needs and more about testing the military’s loyalty towards Maduro, by daring it to turn the aid away.

LENTILS AND PLANTAIN

Some aid agencies like Catholic relief agency Caritas are already on the ground providing what help they can.

In San Francisco de Yare, a town 70 km (45 miles) south of Caracas, Maria Guitia’s one-year-old baby’s belly is distended and his arms thin. The pair live with Guitia’s five siblings and parents in a one-room tin shed with a dirt floor and no running water.

Work is scarce and they live off payments for odd jobs and a monthly government handout of heavily-subsidized basic food supplies. They have taken to inventing meals with what little they have like lentils with plantain from the trees in their backyard.

Guitia, 21, said her son had lost weight over the past five months until Caritas gave them some nutritional supplements.

The United Nations and Red Cross have cautioned against the politicization of aid.

The United States, which is pushing Maduro to step down, sent aid for Venezuela to a collection point in neighboring Colombia in military aircraft, in a show of force.

Guzman dreams of living once more not off foreign aid or government handouts but her own work.

“It’s not that I want to be rich, or a millionaire,” she said. “But I do want to give my children a good future, to make sure I can take them to the doctors when they get ill … and that they eat well.”

 

(Reporting by Carlos Garcia Rawlins and Shaylim Valderrama in Caracas; Writing by Sarah Marsh; Editing by Daniel Flynn and Diane Craft)