In order to calculate the poverty rate, the INE estimates the cost of a representative basket of goods, which includes things such as food, dress, housing, transportation, health, communications, and education. The basket is intended as a representative sample of the type of things an average Venezuelan family consumes during a year. If per capita income falls below the cost of this basic basket of goods, the person is considered poor.
According to this measure, the number of Venezuelans classified as poor shot up in the last year by 1.8 million people. Roughly 6 percent of all Venezuela's 30 million people became poor in the last year alone. The situation is even direr when one looks at extreme poverty, i.e., the number of people whose income cannot even buy a representative basket of food and drink. In the last year alone, the number of extremely poor Venezuelans rose by 730,000. They now reach close to three million people, or roughly 10 percent of the population.
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The 2012 campaign to re-elect a mortally ill Hugo Chávez meant government spending went into overdrive. Suddenly the oil boom was not enough to sustain ever increasing social needs. That year, the budget deficit soared past 10 percent of GDP. The price of oil had stopped rising by then, and foreign funding began to dry up. While the government continued to enjoy good fortune at the ballot box, the bubble was close to bursting for Venezuela's poor.
Since taking office early last year, President Nicolás Maduro has seen the local currency go from BsF 4.3 per dollar to BsF 50, depending on which exchange rate you use. This means that the prices of most of what Venezuelans consume have shot up as well. Annual inflation is running north of 60 percent, and it is only increasing: The inflation figures for April have yet to be published, but unofficially, it was 5.7 percent for the month alone.
The sharp fall in the standard of living is what brought protesters to Venezuela's streets. Many of the people demonstrating are what we could call "the emerging poor": people who were middle class during the boom, but have found that their economic situation has deteriorated sharply since then.
Ultimately, chavismo's "victory" against poverty is just rhetoric. What little gains there were in terms of poverty were due to a government that turned an oil boom into a transient consumption boom. That phase is now over, and poverty is reverting to its long-run trend.
