Hyperinflated Arepa Index part III

January 21, 2015


I was not planning to eat an arepa early in my visit to Caracas, but last night things did not work out and had a couple of arepas. Here is the record so far for the price of an arepa with queso de mano at my favorite arepera:

Nov. 17th. Bs 120

Dec. 7th. Bs. 156 Increase of 30% in three weeks

Jan. 21st. Bs. 178.6 increase of 14.7% in six weeks

Total increase 49.1% in nine weeks, I don’t even want to annualize it!

The optimists would say inflation is slowing down. I imagine a Government official would even make a plot and show it. For now I keep measuring it and it does not look pretty.

But, they are still delicious!


70 Responses to “Hyperinflated Arepa Index part III”

  1. […] en la economía venezolana a través del precio de las arepas; en un artículo publicado en su blog se observa que el precio de la arepa para el 2015 era Bs. 178,57. A más de un año, el precio de […]

  2. Alex Says:

    Miguel, planning on re-activating operations in Venezuela? Let us know what you think of this new exchange thing they are talking so much about. Remember last year you made it clear: no way the government was going allow any system that would come close to resembling a free currency market . Still think the same?

    • moctavio Says:

      The answer is: No way we will activate operations. It was legal last time too and we know what happened, when it came time to blame someone for the depreciation of the Bolívar, the Government went after the brokers, jailing some. Given that we are about to see the biggest depreciation of the last few years in the next two, why would I trust these guys?

      I will write a post on the announcements, leaving Caracas today, when I am here I have little time to write, but the short answer is that I don’t believe it will be a truly free market, it is not in their nature. If it is not, the black market will still be around and we will continue to have four rates.

    • I’m activating a business to sell car conversion kits. They will allow a venezuelan family to reach as far as Curazao and Tobago by car. But I need venezuelans who know how to teach fiberglass coating and do minor mechanic jobs (the mechanic ability is needed to hook up a propeller to a drive shaft and connect it to the flywheel).

  3. Ira Says:

    My God:

    My Yahoo News feed has been loaded with VZ stories since yesterday.

    I know big protests are supposed to happen tomorrow, with at least one loyalist state Governor saying they won’t allow it to happen, but I also read that some protests are scheduled for today.

  4. josiel dias Says:

    Olá meus amigos, como é maravilhoso encontrar sites com este seu. Parabéns pelo belo trabalho, já estou seguindo.
    Aproveitando a oportunidade gostaria de compartilhar com você nosso
    blog. Ficaremos felizes por vossa visita e mais ainda se seguir-nos.



    Josiel Dias
    Rio de Janeiro

  5. captainccs Says:

    >>>And VZ needs every penny (every bolivar)

    Now it’s 1,800.00 bs to the penny or 1.80 new bs to the penny

    • Ira Says:

      Hezbollah bombed the Jewish Center in response to Israel killing a top Hezbollah leader. This is fact.

      What’s going to be interesting is what happens in Argentina in the weeks ahead regarding a real investigation.

  6. never heard of arepas before. What a horrible inflation! Cheers, Maria

  7. Autobot Says:

    288% a year.

    • Fifi Says:

      Nope, not 288%.

      More like 900% a year.

      Inflation compounds, just like interests. So, given that there are 52.142 weeks in a year, the calculation to go from 49% inflation over 9 weeks to the inflation over a year is (1+0.49)^(9/52.142)-1 = 9.08 = 901%.

      No wonder, VZ is a wreck if people can’t compute a compound interest. So, ok, I spare you the last 8% 🙂

  8. Bruni Says:

    Una con queso de mano y una con queso guayanés! Qué rico!

  9. Ira Says:

    I want to thank the posters here who believe in true freedom of speech…

    Because whenever I say that I hate arepas, they don’t drill me a new asshole.

    • Ira, have you tried my spanish style octupus arepa? I had octupus today, tomorrow the octupus leftovers go into a really wonderful arepa.

      • Ira Says:

        Me gusta pulpo!

      • Ira Says:

        I think I don’t like AREPAS because my wife always makes them so boring. Usually cheese, sometimes chicharrones.

        But I really liked some of the areperias in Caracas. The arepas were really small, but there were dozens of filling choices!

        • Alej Says:

          So.. your wife makes the arepas y you make the filling… then you will like arepas

        • Daveed Says:

          Made thanksgiving arepas (with all the fillings) for the last two thanksgivings. They were AWESOME.

        • Carolina Says:

          Ira, it’s ok. You’re not alone. My husband doesn’t like them either, nor his mom. It’s something about the texture of the dough, not the filling. And it’s not that I don’t know how to make them either!
          One venezuelan woman told me once that probably he didn’t like them because I didn’t know how to make them. “everybody like arepas, you’re a bad cook”. LOL.

    • Roy Says:


      Arepas are fine, I suppose, if you are not over thirty and have an iron stomach. For me, if I eat one, it sits in my stomach and I feel bloated for a day. There is just too much grease in those things. But, I probably would have enjoyed them when I was much younger.

      • Kepler Says:

        Grease? Grease? Not in the standard way. If you know how to prepare an arepa, you just use a few DROPS of corn oil for the WHOLE pan and then you put that in the oven. Arepas fritas are not the standard way.

        And the filling can be anything. A hamburger is a zillion times greasier.

        AREPAS AKBAR! No discussion!

        • Ira Says:

          My wife has one of those cast iron press thingies and puts it on the stovetop.

        • BoludoTejano Says:

          You don’t need to cook flatbreads with a lot of oil- or any oil, in some cases. You can cook flat wheat breads, such as pizza [before adding the toppings] or pita, in a hot skillet with little or no oil. Similarly, corn tortillas use little or no oil.

  10. Kepler Says:

    The way to calculate it – for Venezuelans other than Diosdado and the like – is to see how many arepas/tomatos/onions/kilos of meat the average Venezuelan teacher or worker can afford with her salary.

    The answer: clearly less than in 1998. I have done the maths several times.

  11. N Smith Says:

    Greece contracted 25%. I don´t know over how many years. Most probably the last 4 years or so.

    • Ira Says:

      But weren’t they forced to take certain steps for an EU bailout?

      • N Smith Says:

        Yes! But, that is what austerity does to an economy. Germany will not allow Quantitative Easing for EuroZone non-German members, but they did that for the Germans in East Germany. It is tough when your are a dollarized economy in the EuroZone: dollarized in terms of the Euro.

    • In that case the IMF blew it. By the time this is over Venezuelas economy will be the size of Maduro’s cortex.

  12. Ira Says:

    More not surprising news:

    The IMF has just revised its 1% contraction prediction for 2015 for Venezuela to 7%. And that’s not a typo.

    Seven. 7. Siete. 7. Sete. VII. 6+1.


    • Yuzhou Lin Says:

      it does not like those lies your president can lie to his people. what he needs is cash, not a false hope. even though he create a imaginable agreement, he still needs to provide importers dollar cash.

      that is why I do not think it is a lie, because this lie is not necessary and useless.

      • Ira Says:

        Have you followed Chavismo for very long?

        It”s all ABOUT uselessness.

      • moctavio Says:

        Lin: What is your opinion on this article?


        • Yuzhou Lin Says:

          I am working on a short article to explain the VZ loan problem to Chinese. I agree with most of the points of this article. What confuse me is how can VZ calculate the budget deficit, as it has a extremely complex foreign exchange system.

          • That’s simple: they take the incoming dollars and convert them to bolivars using the official rates. The oil production and export figures are falsified, they produce less than they claim. This allows them to make up fake US dollar earnings, which are converted to bolivars at the black market rate. To make sure they got the bolivars they run the printing presses. The trick is to keep everything secret, this allows them to steal the dollars they hide abroad. These techniques are too complicated for economists, it requires practice. The bottom line is to preserve the ability to keep a wallet the size of a suitcase full of bolivars, and as much money as possible in overseas bank accounts.

        • Yuzhou Lin Says:

          I have another question. as I know, most of the china-Latino America loan for oil program are focus on providing US dollar to improve oil industry of those countries. However, in the VZ case, it seems all of the money China lend to VZ came to the fund to support the infrastructure. it makes no sense, because PDVSA needs money to expand its productive and technology, investing in infrastructure does not improve the ability of VZ to repay the loan. what is more, PDVSA had to repay the loan did not lend to it. I just do not know why VZ agree to borrow loan like this

          • moctavio Says:

            Because those in Government are irresponsible and only care about staying in power.

            • Yuzhou Lin Says:

              People in china do not know what happen in VZ and how VZ use those loan money. they only know that China lend much money to VZ and VZ had a big chance not to repay it.

          • You know, repaying the loan was supposed to be rather easy using the oil PDVSA was going to produce under their Siembra Petrolera plan. They just forgot they were supposed to fund it.

            Lin, I think we can blame Hu. Those loans lacked sufficient controls. I supose the Communist Party General Secretary has learned a lesson about crony capitalism as practiced in Latin America by undisciplined communist cadres who follow Chavez-thought.

  13. Yuzhou Lin Says:

    Amigo, i heard the news that VZ and China made a new deal of lending 20billion more to VZ.

    • Ira Says:


      China said nothing, and Maduro said $20 billion in INVESTMENT (projects), and that doesn’t mean cash which VZ needs. It’s also unclear whether this is new investment in the first place, or simply a reworking of the prior deal.

      My guess is (only MY guess), is that the Chinese didn’t offer anything at all, but they are allowing Maduro to save face.

      • Yuzhou Lin Says:

        But Chinese leader still needs his face. Almost all Chinese people think VZ will not repay the loan, in this situation, the news of lending more money may make people angry. maybe, it is only the renew of original deal.

        • moctavio Says:

          Our President said that, yours did not

          • Yuzhou Lin Says:

            that is why , it really confuse me.

            • Ira Says:

              What’s confusing about it?

              VZ now owes China about twice as much oil as originally agreed upon, based on the prior loan(s) and today’s lower prices. But VZ oil production is way down and going way “downer,” and oil is coming from everywhere else. (Frack baby…FRACK!) And VZ needs every penny (every bolivar) it earns from exports just to feed the people:

              Actually, it needs TWICE as many pennies as it earns from oil exports based on today’s oil prices just to feed its people. (Which still puts them in a shitty financial position, but not the shittiest position possible, which they’ve almost reached.)

              How does Venezuela make this economics magic happen? Based on their limited production and world over-supply?

              And why would China loan them MORE money, knowing the regime is going to collapse, and they have no way to repay, ever?

              That’s why the Chinese Ministers said nothing, and Maduro just lied.

        • Block Says:

          Lin, the loan is being repayed in oil. Why do you think Venezuela will not repay the loan? That scenario requires a new government that does not recognize the old accord. Are these state-to-state accords? Since Maduro is illegitimate, anything signed under him can be refused by another government.

    • Lin, with the Chinese loan money maduro brought back from Beijing and 600 bolivars you can buy two arepas, one tequeño, and one juice.

      Miguel Octavio: looks like Raul isn’t going to fast track diplomatic relations. Today they asked for the USA to deny visas to cuban personnel fleeing from other countries to the USA.

    • Block Says:

      Lin, think. Our president wants to confuse you. Keep in mind that Maduro’s confusing words are meant for the uneducated poor. Why do you want to believe everything he says?

  14. BoludoTejano Says:

    Looks like the Arepera prices reflect the black market rate, not any of the official rates.

    • N Smith Says:

      Which is very good for the VZ economy. The only problem is salaries and wages are not adjusted likewise: the normal set-up in an un-indexed hyperinflationary economy. Brazil had no such problems during their 30 years of daily indexing almost all items in their economy. Unfortunately it is too far back (1964 to 1994). No-one can remember Brazil indexed their entire economy for 30 years. Or rather, it was called monetary correction or “correção monetária) not indexation. Everybody expects the Central Bank to do it. If the Central Bank does not do it, then it will not be done – while in fact it is actually an accounting policy. No-one believes (understands) that. Obviously, if the International Accounting Standards Board members as well as the US Financial Accounting Standards Board members do not understand that, it is logical that ordinary people and accountants won´t understand it either. And that is exactly what is happening. Ignorant international and US accounting standard setters means perpetual bad luck for Venezuela. Sorry Venezuela, but that is how the cookie crumbled.

      • N Smith Says:

        Sorry Venezuela, but that is how the cookie crumbled: IASB and FASB members are as stupid regarding economics (the effect of daily indexing in a hyperinflationary economy) as your President is regarding most other aspects of economics too.

  15. captainccs Says:

    At Cúcuta rates the new arepa is one dollar. At Chavista rates it’s closer to thirty. An arepa, give or take, is worth about a hamburger (given a choice I’ll take the arepa any day). Which makes more sense, the Chavista rate or the Cúcuta rate?

    When a rock meets a hard place, something’s gona give.

  16. Luisa Mosquera Says:

    Flight Porlamar/Miami on Avior October , 2014, Bs. 38,000 Same flight now only until March, Bs. 76.000 That looks like 100% increase to me.. Therefore, I also do not want to annualize it!!!

  17. Ira Says:

    The Harina Pan my wife just bought is made in TEXAS!

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