Some major U.S. stocks are currently plummeting, and their decline can be partially attributed to rampant inflation throughout Venezuela.
According to CNBC, Venezuelan inflation is so bad that many residents are worried about where they will get their next meal amid drastic increases in the price of food.
Food prices in Venezuela spiked a whopping 22.2% from July to August, representing the highest rate for the month in over 20 years. Economists are growing concerned that the South American country is on the brink of a major financial crisis.
Meanwhile, in the U.S., some notable stocks are beginning to see a decline, including Twitter, VMware, and Avon.
According to Economic News Daily, Twitter declined 6.84% during the last trading session, with VMware and Avon falling even further, experiencing losses of 8.10% and 7.94%, respectively.
The massive fluctuations are congruent with the performance of most stocks during 2015. Among companies issuing secondaries in the second quarter, about 45% had a positive first-day performance, while 53% were down on the first day, and 2% remained unchanged.
In the case of Avon, which saw revenue drop a staggering 17%, experts believe that the high inflation rates of countries like Venezuela and Argentina are partially to blame for the loss.
Venezuela cannot seem to escape the downward spiral in which it finds itself, and the country’s economy will continue to affect stock prices the world over until it experiences a rebound.
While stock brokers are worried about how Venezuela’s inflation impacts their trading, Venezuelans are concerned with how it will impact their future as a nation.
“This situation has been escalating,” said Paula Diosquez-Rice, principal economist at IHS Global Insight. “The people of Venezuela have had a scarcity of items for a while now.”
The situation is so bad that many Venezuelans are turning to the black market for their groceries. The price of food in supermarkets, which has seen outrageous increases, is controlled by the government.
The country has not reported its monthly inflation data since December of 2014, when the annual rate climbed to 68%. Venezuelan President Nicolás Maduro’s administration also controls the types of economic data that get published.
The unease is palpable between the government and citizens, and Shannon O’Neil, senior fellow for Latin America Studies at the Council on Foreign Relations, does not see an end in sight to Venezuela’s problems.
“With little on the shelves, people are desperate, driving up prices of the goods they can find,” said O’Neil. “Shortages will only get worse, as oil prices are likely to remain low and the country’s debt grows.”