The Hyperinflated Arepa Index Part IV

May 26, 2015

arepaIt has been a while since I reported on my Hyperinflated Arepa Index. In April I had one while in Caracas, but the variation in price was so small (see graph) that I did not think it was worth boring you with the small increase.

Then I went back last week, before the unmentionable parallel rate of exchange had soared, and as you can see in the graph above, the Hyperinflated Arepa Index seems to be a leading indicator of what the abominable website reports, as in one month, there was an increase of 53.3%. This is above what the parallel rate rose in the same period.

You be the judge…

The summary of the increases so far are then:

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

April 15th. Bs. 187.5 increase of 5% in 11 weeks

May 15th. Bs 275 an increase of 53.9% in four weeks

Since it was almost precisely six months since my first delicious arepa for this experiment, we can quote the half a year inflation of 129.16%.

I could do a fit to the slope, but really, it is only five points, we dont not need such sophistication. .

I guess I will have to continue being a glutton and eat those delicious arepas in the name of data collection and science every time I go there. Will have to bike more too…

16 Responses to “The Hyperinflated Arepa Index Part IV”

  1. bythefault Says:

    I find this astounding. The governor of Tachira is calling DolarToday “perverse”.
    As if the reporting on the black market exchange is the problem. This regime is hopeless. It has to go but it won’t go quietly as too many are so invested in its maintenance. Increased repression is not just likely but assured. They won’t give up power willingly. Elections are an illusion. Venezuelans should prepare for civil strife. Only an overwhelming popular revolt will overthrow the regime. Hopefully one day soon, we’ll be talking about the Arepa Revolution not the Arepa hyperinflation index.

  2. Dean A Nash Says:

    Children often utter profound truths, their genius being their simplicity. This is like that.

    • Ira Says:

      Oy, and true story:

      When my younger son was 5 and my wife walked him down the street to kindergarten (he’s 19 now), there was a heavyset (fat!) black woman as a crossing guard, with a short Afro hairstyle,

      And Timmy yelled, “Mommy! It’s King Kong!”

      Hand to God this happened exactly as described.

  3. @Econ_Vzla Says:

    Well, the May 15th. registry comply with the classic Cagan´s definition of hyperinflation

    • Not one accountant in the world and not one country in the world follow Cagan´s 1956 definition.

      They all follow the International Accounting Standard Board´s 1989 definition, namely that hyperinflation is indicated by 100% cumulative inflation over three years. That amounts to 26% annual inflation over three years or just under 2% monthly inflation for three years in a row. 283 countries implement the IASB´s definition as of July 2014.

      Venezuela has been in hyperinflation since November 2009 as stated in a PriceWaterhouseCooper publication in December 2009.

  4. moctavio Says:

    If it were not for the blog, I would not have known.

  5. So, arepas are extremely cheap in Venezuela if you were to buy with US Dollars.

    • Boludo Tejano Says:

      Correction: So, arepas are extremely cheap in Venezuela if you were to buy with US Dollars at the Cucuta/Dolar Today/Black Market rate. Not cheap at the 6.3 rate.

  6. Floyd Says:

    That’s why they should implement Chavez’s brilliant ideas: use Yuca instead of Trigo, and develop a home-grown Gallinero Vertical Industry for the best Reina Peopiedas!

  7. CarlosElio Says:

    If you are going to do a smoothing on the arepa inflation curve, try moving averages, although with 4 point you don’t have much room for averaging.

  8. Roberto Gonzalez Says:

    Miguel we could create the AREPA INDEX now. (like the BIG MAC INDEX). Had one in Caracas Arepa Bar in NY for 8 bucks. So the “implied” FX in this index should be 34,8 VEB/US$. (275/8).

  9. MacPapas Medianas Says:

    That gives you an annualized arepa-inflation rate of 442%. Scary stuff.

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