The extreme volatility of Venezuela’s exchange rate has the crisis-hit country’s shop owners hurriedly marking up their merchandise and consumers balking at the higher price tags.
Just last week, the bolivar currency fell around 70 percent on the black market, according to DolarToday, the opaque U.S.-based website that dictates the black market rate.
Although the currency roared back this week to around 10,387 bolivars to the U.S. dollar, prices for often imported products have already been adjusted, heaping more hardship on Venezuelans who often earn only a handful of dollars per month.
“How is it possible that I bought rice a few days ago at 8,000 bolivars, which was already expensive, and now it’s at 17,000,” said housewife Senovia Gonzalez, 64, standing in a line to buy food in the Paraguana Peninsula that juts out into the Caribbean.
The monthly minimum wage in Venezuela is 97,531 bolívars, or not even $1 per day on the parallel exchange rate, making it the lowest in Latin America despite President Nicolas Maduro’s frequent increases. To that is added a 153,000-bolivar food ticket.
His unpopular socialist government has dispatched inspectors to try to contain the price hikes with fines, but that strategy has been largely ineffective in the midst of an economic crisis with triple-digit inflation, recession, and food and medicine shortages.
“If we do not adjust prices, we have to close, fire employees, work for someone else or leave the country,” said Victor Moreno, a seller of home appliances at a mall in Paraguana.
The opposition-controlled parliament said Wednesday that inflation in the first seven months of the year was 248.6 percent. The Central Bank has not published official figures for almost two years, when numbers began to worsen.
Many Venezuelans are horrified at the weakening bolivar, which has lost well over 99 percent of its value in the last three years. Social media users promoted the hashtag #worktoeat this week.
‘Speculators’ threatened with jail
Maduro blames an “economic war” waged by U.S.-backed coup plotters seeking to bring him down. He has threatened to jail “speculators” who raise prices.
Critics say decade-old currency controls and excessive money printing contribute to inflation and a weakening exchange rate.
But with the government increasingly short of dollars to supply the currency control system, more imports are obtained using the black market rate.
In the first half of the year, about 25 percent of all imports were made by private companies using the black market, according to local consultancy Ecoanalitica.
That means Venezuelan prices are even more sensitive to changes on the black market.
“Prices are reacting with aggressive speed,” said the head of Ecoanalitica, Asdrubal Oliveros.
“Not only shop owners, but all the economic actors in the country see that although the rate has strengthened again, it is not sustainable in the long term and in a month will weaken again,” he added.