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Big Mac doubled its price in Venezuela in a year

Big Mac doubled its price in Venezuela in a year

Posted by Dubraswka Aguilar on December 01, 2014

Venezuelans suffer every hour the collapse of their currency, the increasing of prices, which primarily affects families trying to buy food and medicine, makes hyperinflation very close to the country with the world's largest oil reserves.

Although the Central Bank violated its reporting rules and has not reported inflation rates for three months (the last data was published in late August, 63.4% annualized) Venezuelans feel every day how the Bolivar becomes smoke in their pockets and is exchanged for fewer products, in an economy dependent on imports.

Top dollar Big Mac

The popular Big Mac from McDonalds reflects the inflationary spiral: in September 2013 it cost 125 bolivars a combo with fries and soda, while in November 2014 almost doubled in price to 245 bolivars.

Choosing a plate of junk food to clarify the price escalation has several causes: it is popular in the country, under protest to the Bolivarian Revolution who knew rush against nicknamed "pitiyanquis". But also, so far has not suffered shortages, while most basic consumer products (fresh or processed) ... sometimes disappear for months.

 An employee of the fast food chain told AFP that "almost every month we change the menu and the prices went up. This year is when most have gone".

"In November the salary buys about 13% fewer products than 12 months ago," told to AFP Henkel Garcia, director of the firm Econometric.

In his view, inflation between September and December may be around 5% every 30 days, a calculation in line with many other economists.

Not many dollars

Along with the increasing of  prices prolonged drought exchange which lasted almost two years has influenced a fall in domestic production, which together with the controls in the economy has led to a shortage of at least one in four commodities like edible oil, milk, cornmeal, toilet paper, deodorant, razors, shampoo or detergent.

The inflation has prompted the government of Nicolas Maduro to increase the minimum wage three times in 2013 and three times in 2014, to round 64% this year. With high inflation and interest rates seven times lower for bank deposits, Venezuelans quickly rush to buy everything they can in a race against prices.

And the finished products in part on those hurry purchases - the only refuge is the black market dollar.

But besides movements of panic or speculation, affects the lower dollar exchange allocation as a result of exchange controls.

This adds to Venezuela, which gets 96% of its foreign currency from oil sales- has been falling third the price of its oil in the second half of 2014, which undermines the expectation of currency in a country that imports among other products, more than half of its food and medicine.

150 bolivars per dollar

The pressure is so strong that in the illegal market in a year the dollar went from 40 to 150 bolivars and only in the last month climbed from 100 to 150.

 At the same time the official rate of dollar is nailed-as promised makes a President Nicolas Maduro year at 6.30 bolivars.

"The deterioration of the exchange rate expectations, by falling oil prices, traditionally results in pressure on the dollar.

This forces the government to reduce access to foreign exchange (preferential) and people have to go to the parallel market," explains economist Pedro Palma told AFP. "This creates a very large uncertainty" and being fixed cost recovery basis at black market, which fed inflation, he added.

According to José Guerra, former manager of Research of the Central Bank, the directory of the issuer manages a proposal to cancel the public release of inflation data and only eventually deliver "by direct requests" and after analyzing the relevance of the order.

 Experts predict even overheating of banknote printing in 2015, when Maduro whose popularity has fallen to 30% - will face elections.

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