The Price of a Cup of Coffee in Venezuela Is Up 285,614% in a Year
(Bloomberg) -- Instead of celebrating minimum wage hikes in hyperinflation-pummeled Venezuela, consumers now run as fast as they can to buy goods before the inevitable price increases.
In other words, higher wages are as much bad news as good news as they simply mean the printing press will run faster at the central bank and businesses will react accordingly.
So after President Nicolas Maduro raised wages by a staggering 150 percent last week -- the sixth minimum wage increase in 2018 alone -- perhaps it comes as no surprise that a cup of coffee in the Venezuelan capital of Caracas doubled from the week earlier to 400 sovereign bolivars or about ($0.76).
You see the other immediate effect of printing more money is that the black market exchange rate, which acts as the only real measure for what anything costs in the country, plummeted to a record 526 bolivars per dollar from about 460 previously.
That newly brewed cup of coffee brings inflation to a preposterous 1.7 million percent annualized over the last 3 months, according to Bloomberg’s Café Con Leche Index. Over the past 12 months, we’re talking about an inflation rate of 285,614 percent, which gives you an idea of the pick up in recent weeks after Maduro slashed five zeros from the bolivar and pegged it to a dubious sovereign cryptocurrency.
You could say that any Christmas spirit that may have been building in Caracas is quickly dissipating. The cost of pan de jamón, a ham filled bread with raisins which is a staple of the holiday season, jumped 52 percent in the past week.
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