Archive for April 13th, 2016

Hyperinflated Arepa Index (HAI) XIII: Soviet-Style Inflation

April 13, 2016

arepaplot

Six weeks ago I went to Caracas and had my arepa de queso de mano and to my surprise, the price did not go up at all. Surprise, because everything else seems to have increased dramatically this year. In fact, I went to the Chacao free market too and the typical Venezuelan cheeses I love, had gone up quite a bit, between 20-30%.

Thus when I went back last week I was not only expecting the price to go through theĀ  Bs. 1,000 barrier, but I was expecting it to go much higher then the Bs. 1,100 I was charged. In fact, I go during the week for lunch to a different arepera which is cheaper, but this time it was more expensive. At Bs. 1,100, the price rose by 15.7% in two months and the 12 month increase was the highest ever at 486%.

Since I began in November 2014, the arepa has now gone up almost by a factor of ten.

I was so eager to eat the arepa, that it was not after I took the first few bytes that I realized something was different: The arepa was smaller, it was thinner, had a smaller circumference and less cheese inside. What the arepa was seeing was Soviet-style inflation, since in the old days of the Soviet Union, products would seldom rise in price, but will simply shrink to keep inflation low.

Sort of like this, although it is an exaggeration:

arepita

arepita

It is unfortunate that I did not notice the change (I don’t find out the price until I pay) or I would have taken a picture and compared with the one above taken earlier. I promise to take a picture next time and show you the evidence.

This makes total sense from a competitive standpoint. As inflation has soared, the price of an arepa is becoming too expensive for large segments of the population. Thus, keeping prices low by shrinking the arepa is certainly going to drive traffic in.

Depressing, but true!