Last week, the Venezuelan government resorted to drastic measures to cap the rocketing prices of electronic goods: the army was ordered to occupy ‘expensive’ department stores to force them to lower their prices. In the city of Valencia, some residents took that as a green light to go on a looting spree.
Read more: Looting in Venezuela: 'This is where Maduro’s populism gets us!' | The FRANCE 24 Observers
President Nicolas Maduro, elected in April following Hugo Chavez’s death, launched his initiative on November 8 to fight back against what he called “bourgeois parasites”. National guard forces took over a number of department stores across Venezuela and arrested several managers accused of price speculation. The prices of electronic appliances had increased by 1,000% over the course of the year. Company executives blamed this increase on the high inflation rate, which is currently at an annual rate of 54%.
Several factors explain Venezuela's high rate of inflation. Firstly, the country’s national currency – the Bolivar - was devalued by a third in February 2013 to cover the budget deficit created by the electoral campaign.
What's more, even though the official exchange rate with the dollar is now at 6.30 Bolivars, the black market rate is ten times higher. That has a direct impact on companies that have to import products. Unlike local products, the government does not control the prices of imported products, which can reach extremely high levels.
No comments:
Post a Comment