Venezuela is about to get hit with more bad news: the inflation rate is projected to spike between 720-1200 percent. The nation’s death spiral, prompted by authoritarian socialism, gross mismanagement, and corruption has led to the breakdown of law and order. Moreover, their health care system has all but collapsed, coupled with looting in the wake of food shortages. It’s a mess. Now, the International Monetary Fund is projecting these massive spikes in the inflation rate, which will only torpedo home budgets throughout the country. As the Sydney Morning Herald reported, it now costs $62 for a dozen eggs, but they’re virtually non-existent in the local stores. On the black market, they’re around $208. As the economic conditions deteriorated, some Venezuelans were spending half their salaries on groceries.
The International Monetary Fund has predicted that inflation in Venezuela will hit 720 per cent this year. That might be an optimistic assessment, according to some local economic analysts, who expect the rate to reach as high as 1200 per cent.
To understand what that kind of inflation means, we spoke to Maria Linares, a 42-year-old single mother who works as an accounting assistant at a government ministry and lives in an impoverished suburb of the capital, Caracas.
Her monthly pay, including a food allowance, is 27,000 bolivars ($3761).
That's $US2700 a month at the official exchange rate of 10 bolivars to the US dollar. But Venezuelans have so little faith in their currency -- or the government's ability to fix the country's deepening economic crisis -- that one US dollar can fetch upward of 1000 bolivars (the equivalent of $139) on the black market. At that rate, Linares earns just $US27 ($37) a month.
"The last time we had chicken was in December," she said.
The best deals are generally at government-run stores, such as Mercal and Bicentenario, where the prices are regulated.
To shop there, however, Linares said, she has to line up overnight. Even then, she might come home empty-handed if everything sells out before she gets to the front of the line -- or if she is robbed leaving the store.
At the Mercal, a dozen eggs cost 450 bolivars ($62) in December.
The official price is now 1020 bolivars ($142). But Linares said she never finds eggs at the Mercal.
So she buys them from street vendors for around 1500 bolivars -- a staggering $208 at the official exchange rate.
In December, Linares could buy powdered milk for her 10-year-old daughter and 8-year-old son for about 90 bolivars ($12.5) per pound at the government-run stores.
The official price increased to 245 bolivars ($34) in February.
But Linares said she pays between 750 ($104) and 1000 bolivars ($139) per pound at the street markets.
Yet, it goes beyond food prices. Venezuelans have been caught going through trash looking for food. The lack of access to medicine means for some of the 200,000 Venezuelans living with chronic illnesses, every day is a roll of the dice—one 8-year-old boy with Hodgkin’s lymphoma recently passed away because he wasn’t able to obtain the treatments he needed. With the government working two-day workweeks, unable to even pay for its own currency, and the judicial system virtually shut down to save energy—the country is rapidly heading for the cliff. With virtually every aspect of socioeconomic, and now political life, being shut off, the rise in inflation that will exacerbate the food crisis is the coup de grace in this tragic saga. Right now, we’re waiting on whether a recall referendum against current President Nicolas Maduro, which gathered 1.85 million signatures, will be honored. In the meantime, the world is slowly distancing itself, with U.S. companies expressing concern for the situation on the ground, while others have left the country entirely. Bridgestone recently ceased its operations, and Coca-Cola stopped production due to sugar shortages. Lufthansa and LATAM, the largest airline in Latin America, have announced they’re suspending flights to Venezuela.