Inflation in Venezuela has reached astonishing levels, making life extraordinarily difficult for ordinary people and causing immense economic damage. Annual inflation in the year ending June 2018 reached 46,305%, a record for a Latin American country. Worse, if the trend for the last three months is extrapolated, projections suggest inflation will be 482,153% for the full year.*
The effects of hyperinflation at 46,305% are extreme, and radically different from the ordinary inflation of 2% or 3% experienced in Europe. Money becomes almost entirely worthless shortly after one receives it. There is no point in saving as the value of savings is wiped out, and thus little is invested. Instead there is capital flight, as ordinary people are desperate to get their money out of a worthless currency. What people receive in pay does not keep up with the ever increasing price of goods.
Even getting hold of Venezuelan currency is now difficult, making it one of people’s most difficult daily tasks. They have to stand in long lines at cash machines, since people need ridiculously large sums of money to buy bread. The currency is so worthless than enterprising Venezuelans have taken to weaving banknotes into baskets and other woven goods and selling them to be able to buy food.
Lenin said that the way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation, but in Venezuela it is the poorest, not the middle classes, that have suffered the most.
The minimum wage in Venezuela at the time of writing was 5 million bolivars per month, or about $1.45 at black market exchange rates. Inflation rises much faster than the minimum wage, which is already not enough to feed a family. It is enough to buy 5 cups of coffee a month, and nothing else. Inflation is making daily life next to impossible.
*Please note: Due to the insane level of inflation in Venezuela, the value of money depreciates daily, and far too fast for news outlets to track the devaluation of the currency. Additionally, it is very hard to get accurate exchange rates for the Bolivar since there are many black market exchange rates, which are much more realistic than official government ones. Between updates of this page, 1 million bolivars went from being worth $1.61 to roughly $0.29. Please be understanding if we are not doing the day to day situation justice.