Not hungry for hyperinflation
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.