Hyperinflated Arepa Index (HAI) XII: Hard To Break The Bs. 1,000 Barrier

February 2, 2016


Well, I must say I was expecting the Hyperinflated arepa index to break the Bs. 1,000 barrier in order to keep it up with the unmentionable rate, but it was not to be. In my visit to Caracas last week, I “only” paid Bs. 950 for my traditional and delicious arepa de queso de mano at my secret place, which represents a 17% increase from six weeks earlier and a 431% increase from one year ago. This means that if you earn minimum salary today, you can eat 10.15 arepas per month, or about one every three days, not exactly good nutrition…

There were a number of observations during my visit that I think are worth mentioning. Perhaps the most important one is that I noticed a huge difference since early December when I went out at night to eat out. Really huge. I went to a well regarded steak place on Saturday night with my sister and at 8:00 PM there were only three tables full. And this place is huge.

The whole week was like that, no matter where I went. I took a friend, who was visiting from abroad to look at possible ¨change¨ in Venezuela, to an Italian restaurant that I love and when we arrived at 8:15 PM we were the only ones (It was Monday, but I went back on Thursday and it was similar). later two other tables filled up, including one of my coworkers. But that was it.

It repeated every night. Tell a group of Venezuelans my observations and they will argue for a while about whether it is about security or price. Easy, it is both. The parallel rate has gone up maybe 20% since I last visited, but prices at Restaurants have increased 30-40%. And this implies ordering ever cheaper wines, as the offerings become more expensive and of worse quality. At one place, after ordering three wines, none of which were available, I simply said, tell me what you have!

Simple questions become harder to answer. How much do you tip someone who parks your car? If you get Bs. 4 of gas (half a cent in US$) to fill your tank, what do you pay with? I only had a Bs. 20 bill (2 cents in US$), so I just gave it to the guy. Was it too little? Too much? I have no clue, he seemed happy.  I was probably over tipping the Valets at my hotel, at US$ 20 cents (Bs. 200), they seemed to be jumping to help me whenever I showed up.

Sad, very sad…

But not as sad as the scenes at the airport. Whole families come to say good bye to young people leaving. From Grandma, to aunts, sisters, brothers,nannies or whatever, people hold on to them, embracing them with almost despair. They have no idea as to whether they will see them again soon, or ever. I usually get annoyed at people who come to say good bye at airports en masse, but this time was different. I had to show respect. There were many very private/public spectacles full of emotion, my watery eyes were certainly not an allergy.

But I have always been a sentimental fool…

Then the stern cop asked me at the security check point: What do you do in Venezuela and how long will you be gone? I just said I don’t live here now, I live abroad.

No more explanations were required…he even seemed envious…

Sad, very sad…





72 Responses to “Hyperinflated Arepa Index (HAI) XII: Hard To Break The Bs. 1,000 Barrier”

  1. Shrillary Clinton Says:

    so hows it going down there….have you people figured how to cook and eat all those AK-47s, tanks, MIGs……

  2. M Rubio Says:

    I’ve not gotten out in a while but heard the gasoline prices had finally been raised. I was paying 11 bolívares for a 55 gallon drum of diesel…..11 bolívares!!! The tip for the attendant is bigger than that.

  3. Francisco Says:

    Where are you!?!?! give us your take with the most recent events!!!

  4. Victor Says:

    Hola Miguel,

    Me podrias mandar un email por favor.


  5. Dr. Faustus Says:

    Could we be headed for a default sooner than anyone of us expected?

    “Caracas-based newspaper El Nacional reported Feb. 7 that the country’s new Economy Vice President Luis Salas earlier this month proposed halting foreign debt payments in a meeting with President Nicolas Maduro. “It’s the first reported access to internal cabinet dialogue that we have that suggests that default is being pushed for at the top echelons of government and by the new top economic policy maker,” Russ Dallen,”


    • Ira Says:

      In what way would this default be any sooner than any of us expected?

      Looking at oil prices this past year, it’s been a no brainer.

    • m_astera Says:

      The Venezuelan / Deutsche Bank gold swap was discussed at length on zerohedge the other day. The consensus was “Why sell off the best liquid asset only to defer default for a couple of months? Default now and keep the gold.”

      I would guess there is at least $200 billion in offshore bank accounts stolen by present and former government officials and their cronies. Funny no one is talking about clawing any of that back.

      • Dr. Faustus Says:

        Stop the leveraging of the last viable asset? That would imply reasoned and logical discussions taking place behind closed doors. That ain’t happenin. These people are genuine idiots. They WILL continue making those bond payments. They’re gonna take this economy to a complete and total collapse, and worry about the wrath of the people at a future date. By that time most will have fled the country. Breathtaking insanity.

  6. m_astera Says:

    Q: Assuming one could find a gram of 24k gold for sale in Venezuela, what would be the price in Bs?

    How about a troy ounce of silver?

    • m_astera Says:

      No Replies? I asked because I’m wondering if there is any gold available on the street in VE. Every online precious metals website I’ve found lists gold in Bs at the 6.32 exchange rate, which of course is absurd.

      Present spot price of gold in US$: ~$1200
      Grams per troy ounce: 31.1
      $1200 / 31.1 = $38.58 per 24k gram

      At 6.32 Bs / oz, that works out to 244 Bs/gram, and numbers like that are what the online PM sites are showing. Which, as noted, is absurd. At 1000 Bs/US$ the realistic wholesale value of gold would be 38580 Bs/gram (1 199 838 per troy ounce). But I doubt any would be for sale at that low price. More likely double that.

  7. And here is the punchline: “One of the sources said the central bank has taken an unspecified amount of gold out of the country so that it can be certified, which is required for gold that is used in such swaps. The gold lost its “certificate of good delivery” in 2011 when Chavez transferred it from foreign banks to central bank coffers, one of the sources said.”

    quote from http://www.zerohedge.com/news/2016-02-07/venezuela-prepares-liquidate-its-remaining-gold-holdings-pay-coming-debt-maturities

    so question I have is,

    since Venezuela central bank is working with deustche bank to get swaps for the gold, does that mean Venezuela has begun sending the gold abroad for certification? I know the article says as much, but was wondering if anyone in the know, have any confirmation that this is being done…

    from the article it sounds like Vnzla central bank was working with BIS (swiss bank) but I assumed they used whatever left in gold reserves that are held in london as collateral, but since those are now being used with the swaps that venezuela did with (goldman or morgan or bank of america, not sure which) I’m going to assume that venezuela must now have to send gold abroad again to get certification to be able to get into a swap with deustche bank right?

    just wondering if anyone else has any clue, im gonna assume this is their last ditch effort to get enough liquidity for the October payment, which would leave the coffers entirely empty afterwards…. which i dont know how one goes about doing this without the cost of venezuelan lives, no money spent to import the basics, and all being sent off to wall street, and those pentions…. no offense to wall street, its just that at this point, its not very “socialist” to pay wall street than to help your own population… just my two cents…

    • moctavio Says:

      I understand something like14 747’s took most of the gold abroad. So much for the sign in front of the BCV building about the gold in Venezuela is a sign kf sovereignty

  8. Lee Kuan Yew Says:

    No ships, no food? Well, I I had a ranchito or a peñero, I’d start growing tomatoes, raising chickens, fishing fish and selling them, collecting mangoes for resale, and even consider buying a Cow for milk, and then sell it for meat.

    But no, “el pueblo” is still super-Enchufado, and somehow they have plenty of cash, and still afford the expensive arepas. Most of them, not all. That’s what no one likes to admit. The situation would have Exploded a long time ago if people were really hungry.

    • Alexis Says:

      And how exactly would you sell your products?

      Remember that there are price controls on most essential products, you could easily get into trouble if you attempt to sell anything at reasonable prices (such as, above the cost of production).

  9. M Rubio Says:

    Back when I flew in and out of the country often I saw that scene dozens of times, except there were always many hundreds, if not over a thousand containers stacked and waiting for processing.

    Even if the ships started arriving tomorrow, their cargoes would not reach their final destination for many weeks, if not months.

    I see a perfect storm of things going horribly wrong for Nicolas Maduro this year. How he and his chavista cronies react is anyone’s guess at this point.

  10. M Rubio Says:

    Things are critical here in the East. No sugar, no rice, no meat, no chicken, no egg, no bread, and for the last couple of weeks, no sardines. Tuna disappeared long ago.

    I honestly don’t know what the locals do to survive.

    • Dr. Faustus Says:

      Scary. One can hardly believe this is all happening. Back to Moctavio’s last posting on Puerto de La Guaira. David Moran took this photo, yesterday, of La Guaira. The place is empty, no ships, no containers, nothing.

  11. Lee Kuan Yew Says:

    “This means that if you earn minimum salary today, you can eat 10.15 arepas per month, or about one every three days, not exactly good nutrition…”

    That’s if you have no wife, no children, and no other expenses (healthcare, electricity. phone, clothing, school, transportation, cable, birthday party, water, zero luxuries (music, computer, beach weekends)..

    Therefore, one must conclude that not only the 5 Million Enchufados working for the Criminal Regime make way more than “minimum salary”. They seem to have tons of cash every day, somehow. But the rest of “el pueblo” must also have some “guiso”, some “tigrito”, some “palanca”, something not perfectly legal. I don’t believe Venezuelans work 2 or 3 minimum-wage jobs.. Nope. Drugs, bachaqueo, or Enchufe, in 80% of the cases.

    Or else, please do the math. Is Donald Trump supporting those Millions of “minimum wage” people? Or is Maria Lionza supplying the arepas?

    Even with TEN (10) minimum wages, how can they make an honest living?
    The level of utter CORRUPTION in Cleptozuela is much larger than anyone likes to admit. At every level. Not just the regime pigs. Every level. Everywhere: Enchufados or stealing. Or else, please do the arepa math once again, for any entire family budget. That’s why I don’t cry too much for “el pueblo”. They are usually (not always) highly corrupt, lazy, enchufados, and deserve what they are getting, to some extent. Not all, but most. Or do the math.

    • Roger Says:

      Your right but it also exists in every LatAm country. The difference is that instead of being 10-20% of the economy, in Venezuela it has become the economy. The amounts stolen at the top are historic and the rest goes or rather went to buy workers and voters.
      Nowhere in latam do the majority of people make enough to live on. That’s why everybody works at something and live many to a room. But, when you consider that Caracas can cost as much as New York City to live in, it make you wonder,

      • Lee Kuan Yew Says:

        I have no other rational explanation but to conclude that over 80% of Venezuelans are “Enchufados”, one way or another, if not utterly corrupt.

        The arepa index barely covers the arepa..

        • Roger Says:

          Your right. People will do whatever to survive. That is our survival nature. In some parts of the world, we are still eating each other. I would expect us fat gringos would be very tasty? But, what wine would go well with us? This is not a joke, there are many present day references to it on the web. The failed state of Somalia is at the top of the list.

  12. Juan Says:

    I do agree with most of this post, but having kids and picking them up at parties late at night, i do notice a difference in the amount of cars being diven at night. The volume of cars has increased dramatically. A few months ago, I would not find one car at 3AM and now I am always with cars around me. It feels a little safer!!!

  13. Thebench Says:

    Wasn’t there a drop in the VIII arepa index?

  14. Concerned Venezolana in N. California Says:


    Is there any good news on horizon with respect to addressing the shortage of Medicine?

  15. cpc Says:

    Miguel, you should tip a Valet Bs 100 to 200. Next time you are in town, remember to adjust that amount to your arepa index.

  16. “A cheese-stuffed corn cake—called an arepa—sells for nearly 1,000 bolivars, requiring 10 bills of the highest-denomination 100-bolivar bill, each worth less than 10 U.S. cents.” I think the Wall Street Journal is reading your blog. (http://www.wsj.com/articles/inflation-wrought-venezuela-orders-bank-notes-by-the-planeload-1454538101)

  17. Jeffry House Says:

    I spent time in Nicaragua during the first Sandinista administration, but having no purchase authorization, had to eat at restaurants. No matter what, they were always empty except for other international visitors. The menus looked great, but “No hay” was the most common refrain. Usually, there was only one item really available: chicken with rice and beans.

    Your experience sounds familiar.

  18. Dr. Faustus Says:

    The need for new Bolivar notes is so great that they’re flying them in via 747’s from around the world. Sorry, but I think the arepa prices will be going up next week.


    • Ira Says:

      And the continued stupidity and arrogance of the administration:

      Still refusing to print notes above 100 because that’s an admission of failure…

      And wasting millions of Bs having to print all those bills, instead of adding larger denominations.

      Not to mention the WONDERFUL impact all of this new money will have on already hard-to-fathom inflation.

  19. marc in calgary Says:

    I think going over the 1000 Bs barrier is seen as a bit of a leap, perhaps into a further unknown, although the next levels of nonsense are well known to those that study hyper inflation.
    It just doesn’t get any easier for those without access to government funding, contending with a devaluing currency 😦

  20. Pumba Says:

    “My grandkids couldn’t believe there was a place in the world that you couldn’t turn on your phone and get anything you wanted,” said Brian Starer, a partner in New York at law firm Squire Patton Boggs who recently took his family on vacation to Cuba. “They were constantly looking at their screen hoping something would pop up.”

  21. Dave Barnes Says:

    Is there any way for VZ to avoid complete economic failure?
    Even if oil goes up by 50%, that will not be enough revenue.

    • moctavio Says:

      Yes there is, but it require economic common sense and going to the IMF. It will not happen with this Government.

  22. […] Hyperinflated Arepa Index (HAI) XII: Hard to Break The Bs. 1000 Barrier, Miguel Octavio, The Devil’s Excrement […]

  23. You haven’t arrived yet at Soviet or Cuban conditions, although I suspect things will get much worse in 60 days as electricity and water wind down.

    I lived under much much worse conditions in areas such as food, medicine, electricity and water, but crime was kept under control…state security would execute criminals in a hurry. When I combine crime to the fact that Venezuelans were always a pampered population, I have to conclude Venezuelans are suffering much more. But wait until you have to have a tooth filled and the dentist gives you a shot of rum and ties you down because there’s no anesthesia.

  24. Roger Says:

    Cheap is relative. Even when I was there in the early 90’s it was not hard to eat and drink more than the mininum wage most people get just as now. Of course I do love Lomito! Even our stops at roadside stands for Arepas or pollo a la plancha was something many Venezuelans could not afford day to day. In remote areas that we went to it was not uncommon to see women making Arepas from scratch using dried corn kernals. When the banks failed cash was tight and then inflation went crazy (little did we know) we had to go Crillio to try and keep it going. Then the markets were full of good local food at local inflation rates and if you knew how to use it, went a long way. Everyone loved my French pea soup loaded with jamon and vegies! But now, there is little local food (much less meat) and most imported is regulated to where it is a loss to trade in it and even the government can no longer subsidize the prices they set and much less afford to import it.
    Your story about the airport is sad. The only good thing is they don’t seem to be taking their valuables as they leave like they did in Cuba?
    How long can this go on I have long since given up on? But in the 21’st century walking away from it all like the Toltec’s who left their cities and went back to the rainforest to grow yuca is not an option.Though, even if the Yamomani Headmen Council were to take over it would it be an improvement?
    I still think that Bolivar was correct it trying to form a United States of South America. To date, not one of them has the per capita GDP of even the state of Mississippi! Oil or not, I don’t see Venezuela getting past this alone.

    • Ira Says:

      Why on earth wouldn’t they take their valuables with them? And the only valuables would be jewelry anyway.

      • Nebelwald Says:

        What Boludo meant is that cubanos leaving the island have their valuables confiscated.

      • Roger Says:

        The first Cubans to flee Castro had their money and valuables taken from them as they left for Miami and it was still better than getting executed or imprisoned. Who knows what could happen if things go out of control and they refer to the Castro game book? When we look at the middle east and Africa, we know what is still possible!

  25. Boludo Tejano Says:

    This means that if you earn minimum salary today, you can eat 10.15 arepas per month, or about one every three days, not exactly good nutrition…

    That puts Venezuela’s economy into perspective. How would the price of your arepa compare to a Big Mac in Caracas?

  26. Gil Says:

    Hi love your blog …I’m obsessed with all things Venezuela so I spend a lot of time online reading about the current situation and the surrealism that is the Venezuelan economy … I’m curious, how much was the steak? And a typical Italian dinner? Were they a bargain in USD?!

    • moctavio Says:

      Well, the steak was cheap, once you subtract the wine, which was half the bill. There were three of us, we had arepitas, nata, queso, aguacate, platanos fritos, hallaquitas and I had a sirloin parrilla and my sister and her daughetr split a bife the chorizo and the niece had a chorizo. The cost? Bs. 16,000 for the food (US$ 16 ) and Bs. 14,000 for the Italian wine (Montepulciano) or US $13.

      The italian place was about the same, maybe a few bucks more for the food, but we did not eat anything to start with, just pastas.

      A third place was about Bs. 15,000 per person with one bottle of Argentinian wine, or $15 per person.

      I guess cheap….

      • Gil Says:

        Cool tks for the info! I guess USD 29 for a steak dinner for 3 is dirt cheap. That’s a suggestion for a future post. I’d love to know how much regular urban life items cost, like a Big Mac combo, or a movie tkt at the mall, or an average meal at a mall’s food court, or a latte at Starbucks (are they there?), a large pizza at a pizzeria or an hour at an Internet cafe, that kind of thing. That would be an interesting post!

        I do think you hit a very important point, which I’ve been puzzled about for months and months. With middle class salaries essentially decimated, I always thought that consumption at malls and restaurants would have all but disappeared… The only ones now with available income would be the really wealthy or bachaqueros, don’t you think?

        • Luis Pena Says:

          There is no Starbucks in Venezuela. Things are dirt cheap is you have dollars changed at the black market exchange rate. Do not try to use your dollar credit card because then there is a whole different story

          • Ira Says:

            So if you’re dumb enough to be a wide-eyed tourist now visiting the country for the first time, what’s the approximate exchange from $ to Bs at the casas de cambio, and your hotel?

            Tourists sure don’t seek out black market rates.

            And hell:

            I remember visiting the DR and doing this the first day or two, exchanging on the street for the best exchange, and then realized:

            I don’t know what this money is supposed to look and feel like! For all I know, they’re giving me play MONOPOLY money!

      • Ira Says:

        Nata is that heavy spreading cream, right? Like to put on bread?

        I LOVE that stuff, but haven’t found the same thing near me in So. Fl.

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