Venezuela Hyperinflation Passes 149,000 Percent
(Bloomberg) -- When Venezuelan President Nicolas Maduro lopped five zeros off the bolivar and re-branded it the “sovereign bolivar” back in August, the move brought a sense of normalcy to everyday transactions. A cup of coffee, for instance, no longer cost a mind-boggling 2,500,000 bolivars, but rather a more reasonable-sounding, and much easier to dole out, 25 bolivars.
But now, less than three months later, that veneer of stability is quickly vanishing. The price of that cup of coffee soared into triple digits this week, hitting 120 bolivars, according to Bloomberg’s Cafe Con Leche Index, and it only feels like a matter of time before it once again is in the thousands and then millions. After the latest surge, the index now spits out an annual inflation rate for Venezuela of 149,900 percent.
Part of the reason that inflation continues to spiral out of control is that Maduro’s efforts to stabilize the bolivar in the foreign-exchange market are failing after a brief period of modest success a few months ago. The currency plunged to 270 bolivars per dollar this week in the black market, where most Venezuelans buy and sell dollars, from a range of about 95 to 115 bolivars per dollar two months ago, according to Monitor Dolar.
Venezuelan inflation -- the result of massive government deficits and constant central bank money-printing -- is now so hard to keep up with that many restaurants no longer bother to include prices on their menus and some stores have done away with price tags altogether. Waiters and store clerks inform clients of the cost when they ask. And a large number of things, from dentist appointments to gym memberships, are priced in dollars to avoid the hassle of constantly changing prices.
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