Not hun­gry for hy­per­in­fla­tion

Toronto Star - - INSIGHT - RACHELLE KRYGIER

Shortly be­fore lunchtime, Freddy de Fre­itas sat be­hind the bar of his restau­rant in cen­tral Cara­cas and scrolled through mes­sages from his food providers.

“Coca-Cola,” he read out. “Twenty-four bot­tles, 394 sov­er­eign bolí­vares.” “Gali­cian bread, 180.” In one week, prices of prod­ucts had more than dou­bled, said De Fre­itas, 39. He turned to a com­puter screen and started ad­just­ing the prices of 100 menu items on a spread­sheet.

“If you don’t up­date your prices on time, you can’t sur­vive,” De Fre­itas said.

Petroleum-rich Venezuela is un­der­go­ing a deep eco­nomic cri­sis, due to the gov­ern­ment’s failed so­cial­ist poli­cies and years of rel­a­tively low oil prices. Recorded in­fla­tion for Au­gust was the high­est in the coun­try’s his­tory, ac­cord­ing to pri­vate econ­o­mists and the op­po­si­tion-con­trolled Na­tional Assem­bly. It is ex­pected to reach an an­nu­al­ized rate of1mil­lion per cent by year’s end.

Many stores are keep­ing their doors closed and pro­pri­etors are won­der­ing whether they will have to re­duce per­son­nel. More than 130 man­agers and em­ploy­ees of busi­nesses have been ar­rested in the past few weeks, ac­cused by au­thor­i­ties of “spec­u­la­tion” be­cause they have hiked their prices.

Pres­i­dent Nico­las Maduro has sought to sta­bi­lize the econ­omy by slash­ing five ze­ros from the cur­rency — the bolí­var — as well as rais­ing the value-added tax and adopt­ing a 30-fold hike in the monthly min­i­mum wage. But econ­o­mists say core prob­lems have not been ad­dressed, in­clud­ing price con­trols, dis­torted ex­change rates and, es­pe­cially, the cen­tral bank’s fever­ish print­ing of money to fund gov­ern­ment spend­ing.

De Fre­itas, who runs a Mediter­ranean-style restau­rant, Posada de Cer­vantes, plans to keep his 15 em­ploy­ees. “The wage in­crease is soon go­ing to be eaten away by in­fla­tion any­way,” he said.

Some­times, he barters with other res­tau­rants — he once ex­changed shrimp for rice. Meat is also on the list of items whose prices are con­trolled by the gov­ern­ment and which busi­nesses say are un­prof­itable to pro­duce.

He walked past a pile of bags con­tain­ing such hardto-find prod­ucts as corn flour and toi­let pa­per. “When I see them, I buy them,” he said. De Fre­itas sat down, and the lights went out. “Great,” he said, shak­ing his head. “Now we don’t know if we’ll open for lunch.” Work­ers rushed to turn off ap­pli­ances.

Twenty min­utes later, the lights came back on. Cus­tomers started to come in, fill­ing about 10 ta­bles — a third of what the lunchtime crowd would have been three years ago.

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