Hyperinflated Arepa Index (HAI) XI: With Elections Comes Sharp Rise

December 15, 2015


On the last day of my very intense visit to Caracas during the Parliamentary election, I had a chance to go sample another one of the very fine arepas de queso de mano that I enjoy so much. And there was a big jump of 24.6% in the three weeks since my last sample, one of the biggest changes I saw all year with the arepa which a year earlier was Bs. 156, reaching the incredible price of Bs. 810 each. This represents a one year increase of 419%.

I had sort of expected a big rise, as i know the exchange control office had visited merchants ahead of the election. While forcing merchants to bring prices back, the agents also suggested that they could increase prices after the elections.

Shelves are now emptier than they were before Dec. 6th. As someone told me today on the phone: “No, don’t worry, there are fewer lines, there is very little to buy…”


16 Responses to “Hyperinflated Arepa Index (HAI) XI: With Elections Comes Sharp Rise”

  1. Blackburn LeBlack Says:

    Hi Miguel, I’ve been a regular reader for a couple of years now, and happy whenever I see you have a new article.

    One consequence of this is that I’m experiencing intense cravings for an ‘arepa de queso de mano’, but I do not happen to be anywhere near Venezuela! In fact I’m currently in Scandinavia and there are no Arepas here to my knowledge. lol.

    Is there an online recipe which approaches or describes the real McCoy, or if I happen to be in Miami sometime, is there anyone who makes a good Arepa there?

  2. Ira Says:

    I know you love your Arepa index index, Miguel. But it’s become irrelevant because things are so fucked up across the board,

  3. Floyd Says:

    The regime didn’t unleash a horde of goods for the election… shocker

    • IslandCanuck Says:

      I don’t understand many things:

      #1 Why in god’s name they proceeded with the election when it was so obvious what would happen? Maybe not to the extent that it turned out to be but surely they knew that there was going to be a backlash to their dumb economic policies.

      #2 If they decided to proceed where were all the handouts? Other than a few taxis and SUNDE reducing prices in some stores there was still nothing in the stores and huge line-ups right up until the day of the election (and continuing afterward).

      #3 Once the blow had happened and the world community had them under a microscope why didn’t they immediately try to change things for the better? Instead they went on the attack trying to stack the Supreme Court and threatening more severe controls. Yeah, like that will work.

      We are in for a terrible 2016 no matter how successful the MUD is in making changes.

      • moctavio Says:

        #1 They did not think they would lose so badly.
        #2 There is no money
        #3 They are ideologues, who believe that being a radical is the way to remain on top of Chavismo.

        Yes we are.

  4. Sales Man Says:

    The only hope for a soft landing in Venezuela is a quick and comprehensive reform of PDVSA. It needs to be a professional, world class oil company again.

    The owner (the people) can use 100% of the after tax profits for social development projects.

  5. moctavio Says:

    Because it is not sufficient to juts change the exchange rate, you need to control monetary policy, price of gas. It is really not the Assembly’s role to manage the economy. They can put a framework, but if the executive controls policy you could do more damge.

  6. nacazo Says:

    moctavio: this is something i don’t understand. Why can’t the new assembly pass a law that says that the government will not interfere with currency exchanges and let them be what they be? If the answer is that some of the new deputies are involved in arbitrages or they want to get in the goverments rackets and don’t want to lose money is one thing but in theory they could pass such law right?

  7. Diocletian Says:

    My comments is tangentially related to the cost of arepas in Venezuela (i.e. the true measure of inflation).

    Several people have made the commented that the pressure is now on the National Assembly to improve the economy. To my mind, the dynamic that Cabello and Maduro are creating– one of complete denial of an opposition victory– suggests to me that nobody will be fooled if the economy does not get better.

    While Machiavelli noted that fear (we would call it respect today) is more powerful than love, a government that is hated by its people is sure to be overthrown regardless of the level of fear.

    Clearly, the role of the army is critical here. Will it support the elections? Will it support the government? Will it split? One way or another, this could easily turn into a civil war.

  8. NET. Says:

    One-year price increase of 519%?

  9. CarlosElio Says:

    There is a stalemate. Oil prices keep going down and the ability to honor debt obligations is murky at best. Isolated in the international community, Venezuela may see oil exports impounded by international courts. Cutting off the only source of hard currency will sent the economy to the abyss. Then your arepa index will behave like a limit function (1/n) when n gets close to zero since there is zero resources, and the arepa index will approaching infinity.
    The pressure on common Venezuelans will reach exasperation and exasperated people do crazy things.

  10. Dean A Nash Says:

    Miguel, I’m sorry to repost this, but being so far removed, I have no feel for the situation other than what I read. And you are my most trusted source.

    My thoughts were, “what does Maduro have to lose by dealing?” If he allows the AN to raise the price of gasoline, liberate prices, etc… and things don’t improve, he can point to his own “magnanimity” and perhaps win more votes. And he doesn’t have to agree to all of their demands, but at least the ones that will fill the empty shelves. (Translation: he can keep the gas gift to Cuba, thereby solidifying his main support.) At the least, he could argue that he and the country gave the opposition way a fair chance and it failed. On the other hand, should things improve, he can also credit his magnanimity in accepting reality and changing (see: Communist Party of China). Furthermore, he could then argue that giving absolute control to the opposition would take the country back to the days of AD/Copei, and really, who wants that?

    Miguel, I’m ALWAYS interested in your learned opinions. If you have the time, why won’t this work? If the answer is, as the Iguana says (irrationality), please just make a quick comment.

    • moctavio Says:

      He does not seem interested in dealing with the opposition so far.I am not sure if it is denial, or what. I will write a long post on what ahead, hope I may answer some of your questions, but the path is very unclear.

    • The National Assembly won’t play into such a simple game. They will try to behave as an assembly should, and get on tv. And that’s something Maduro can’t allow. He’s going to play hardball all the way. Why? Because the have way too much to lose, and he has the Castro dictatorship example.

      Our dear friend Obama sold us Cubans into slavery forever, right now, every chicken crap tin horn dictator knows he is perfectly safe as long as he doesn’t mess with the USA sacred cow in the Middle East.

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