How the spiral of hyperinflation in Venezuela is reflected in the market
Diverse economic firms assure that the country is going through a monthly increase of 50% of the prices of the products
"It's a good thing you bought meat on Sunday," Jimmy tells a customer on Tuesday before re-labeling the price list that marks a 25% increase in a week.
Venezuela went from suffering inflation to a hyperinflation of its economy. On the street it is reflected in constant price hikes, missing products from the shelves, black market and anxiety in traders and customers.
The most accepted data in the economic literature to catalog hyperinflation is that of a monthly increase of 50% of prices.
The government does not give official data, but several Venezuelan economic firms say that this figure has already been reached.
At BBC Mundo we decided to monitor for two weeks the price of several basic products in the popular market of San Martín, in Caracas.
It is a microcosm that reflects the economic chaos of a country in which inflation, shortages, lack of foreign currency to import and price control make a perfect storm.
In the two analyzed weeks, from Tuesday, November 21 to Tuesday, December 5, the result by products was as follows:
A carton of 15 eggs went from 100,000 to 150,000 bolivars, 50% more
Hard cheese, from 85,000 to 148,000 bolivars per kilo, 74% more
Onions, from 35,000 to 60,000 a kilo, 71.4% more
Pork meat, from 138,000 to 245,000 per kilo of pork chop, 77.5%.
The numbers show the situation of hyperinflation that shakes Venezuelans with special virulence this Christmas season. Behind the figures there are some stories that better explain the effects.
Jimmy, the charcutero
While Jimmy cuts pieces of pork, he answers again and again the question of how much it costs.
It's Tuesday and they just brought him merchandise. You have already deleted the price board. Then it will highlight it. Again. "Sometimes I'm changing them up to twice a week," he says.
The meat has come at a higher price. Its selling price rises because the purchase price rises, because in turn the price of the pig's food and transport goes up. An endless spiral with the verb rise as axis.
Jimmy remembers that a year ago the kilo of meat was in 6,500 bolivars. This Tuesday, at 245,000. That is an annual inflation of 3,400%, well above that calculated by the International Monetary Fund (IMF) and the firms of economic studies of Venezuela.
A kilo of pork chops costs approximately 40% of the minimum wage, after the last increase in just over 456,000 bolivars, just over 4 dollars in the change in the parallel market, the reference in the streets.
Jimmy benefits from the fact that the pig is not regulated. Next to it, the stalls selling chicken and beef, products of a price defined by law, are empty, closed.
Mr. Luna has been selling beef in this market for 31 years. Talk to BBC Mundo with your arms resting on the counter. Has nothing to do. There was no meat.
He states that the regulation price established by the national government does not offer a profit margin. "The truth is that we are obstinate (annoying) We are not doing anything and here what we come is to spend," he says with a tone between annoyed, sad and resigned.
Beef, at 49,000 bolivars per kilo, according to the recent Price Law Agreed with the productive sectors, is officially much cheaper than an egg carton or a kilo of cheese.
But it is not found or sold on the black market to anyone willing to pay a premium.
Yolanda, the lady at the egg stand
Yolanda is about 70 years old and runs a small stand with her son selling honey and eggs. He invented his name because, like many others in the San Martin market, he is afraid.
His son was almost arrested by agents of the Bolivarian National Guard who, with rifle in hand, visited the market on November 25 together with officials of the Superintendency for the Defense of Socioeconomic Rights (Sundde), a sort of "police prices".
In the middle of the Christmas season the control is increasing to try to control them. In the market that translated into the application of a new law that ends with the 30% profit margin for the seller.
Therefore, everyone had to lower their prices between 10 and 15% last week. The consequence is to sell almost at a loss because that minimum profit does not even cover replacement costs. And we must add the rent of the premises, the cost of the bags, the salaries of employees ...
"In 19 years here, I had not seen anything like it," says Yolanda.
This week he bought a box with 12 cartons of 30 eggs. Each carton cost 140,000 bolivars and sells it to 150,000. Those 10,000 bolívares of profit hardly give for a café con leche in Caracas.
Since nobody wants to sell at a loss, this control generates the disappearance of the product or a parallel market. Outside the enclosure, on the sidewalks, the eggs or the coveted chicken are sold (and bought) at a higher price.
BBC Mundo requested an interview with the director of the Sundde, William Contreras, but so far has not received a response.
Maria, the vegetable seller
To adjust costs, María plans to charge the plastic bags where she inserts the bananas, peppers or onions, whose price also shoots up.
Feel the impact of Sundde prices and audits.
"Sometimes they are hooded, they are horrible, they produce an intimidating effect so that you do not work or protest, here you work stressed or depressed, there are some who do not even open," he says.
Like many, Maria increases the price somewhat once the agents leave. If they come back, they will have to be reduced again.
In the position next door, María Sánchez buys two kilos of money.
"I can not even buy eggs," says the pensioner, who lives with her husband.
For the first time he does not feel like cooking hallacas, the typical Christmas dish in Venezuela, a kind of tamale that, wrapped in a banana leaf, hides a mass of corn flour filled with vegetables and meats of different types
At 70, he counts the days to go to Chile in February to live with his son. Another Venezuelan who leaves the country because of the effects of the crisis, whose main symptom is hyperinflation.
What are the causes?
In a country where almost everything is imported, including fertilizers, seeds and animal feed, the dollar is the reference.
The government has a monopoly on selling dollars since 2003, when it established a foreign exchange control. Now, with the crisis and falling income, dollars are scarce, which do not reach the private sector.
You go to the black market and there the demand makes the parallel dollar an object of desire.
The government considers it illegal and calls it a "war dollar", but despite being obscure or speculative, it is the benchmark in Venezuela.
And its value goes up and up. At the time of writing this article a dollar was worth about 103,000 bolivars.
"Because the dollar went up", is the usual explanation when asking the reason for the price increases.
"I do not know if it's for the food of the pigs, that they bring it from the outside, they (the wholesalers) what they say is that they work with the parallel dollar as a reference and everything they use to raise the animal is imported," he says. Jimmy the butcher.
The president himself, Nicolás Maduro, recently used the term hyperinflation to denounce the "price variation from one day to another."
"Criminal hyperinflation"
He called it "criminally induced hyperinflation," part of the "economic war" he attributes to the United States and local businessmen.
It seeks to combat it with increased wages and bonuses. According to experts critical of the government's economic policy, this is behind the main cause: the monetary imbalance.
The State faces the deficit of its accounts due to the fall of its revenues -especially the oil companies- emitting more money. There are more bolivars pursuing fewer and fewer products because the supply is falling.
According to the firm Síntesis Financiera, in the first three weeks of November, monetary liquidity increased by 33.5%. In Peru, for example, it grows at a rate of less than 10% per year.
"This spiral only stops with an adjustment," says economist Omar Zambrano, critical of a government that does not seem willing to dismantle any of its controls or take the classic measures in these cases.
The expert foresees a "stage of very high economic instability" that could also bring political instability shortly before the presidential elections. Because the inflationary spiral has no limit or ceiling.
"What is coming is a more virulent hyperinflationary episode, prices will change week after week, but two or three times a week or daily," Zambrano ventures.
How will the merchants and buyers of the San Martín market support it?
Look what I am living in my country and it does not seem to me that an oil country is in this country give it an upvote if you do not agree