Venezuela to leave diesel prices unchanged after historic gasoline hike

CARACAS (Reuters) -- Venezuela's government, which sharply hiked gasoline prices on Friday, will not increase the price of diesel because that could feed into higher food and bus fares, President Nicolas Maduro said on Saturday.

The government raised the price of gasoline for the first time in nearly 20 years, raising it over 1,300% for 91-octane gasoline and over 6,000% for 95-octane, though it still remains the world's cheapest gasoline.

"I decided to leave diesel as it is, not to touch diesel so that there's no problems with cargo or public transport," Maduro said in a televised broadcast.

As the majority of Venezuela's cargo and public transport uses diesel, according to the president, an increase in diesel costs would likely trigger higher food and bus prices, hitting poor Venezuelans hardest.

Inflation in 2015 hit 180.9%, according to the central bank, and this year the International Monetary Fund predicts it will surpass 700%. The value of the country's bolivar currency has dwindled on the black market, and there are shortages of everything from food to medicine.

The fuel increase will bring in much needed hard currency though many economists see it as nowhere near enough.

Venezuela's 91-octane gasoline now costs 1 bolivar/liter (1.057 quarts), while 95-octane gasoline now costs 6 bolivars -- the latter being 60 US cents at the strongest official exchange rate, though just a sixth of a cent at the black market rate.

Diesel will continue to cost just 0.048 bolivars/liter, or just under half a US cent at the strongest official exchange and 0.0048 US cents/liter at the black market rate.