Venezuela's inflation will reach 1000000%! Millionaire can only buy one kilogram of meat

Two months ago,Buying a cup of coffee in Venezuela requires only 190,000 Bolivars. Last week, this price has soared to 2 million Bolivars.

This situation is similar to Germany in 1923. At the time,A gentleman walked into the cafe，Flower 8000 Bolivars bought a cup of coffee, but when he finished the cup of coffee, he found that the same cup of coffee had risen to 10,000 Bolivars.

Between the two days, prices soared several times, which made Germany the year known as "the most classic inflation." Today, Venezuela seems to be coming to the fore.

Recently, the International Monetary Fund (IMF) said that Venezuela is in deep financial crisis, and by the end of this year, the country's inflation will reach the level of “10,000 times a year”.

IMF Western Hemisphere Affairs Director Alejandro Werner pointed out: "We expect Venezuela's inflation rate to soar to 1000000% by the end of 2018, showing its economic situation with Germany in 1923 or Zimbabwe around 2008 similar."

Millionaires can only afford one kilogram of meat

Hyperinflation has been going on in Venezuela for more than a year. Although the Maduro government raised the minimum wage four times this year, the Venezuelan people of 5 million Bolivars per month could not afford three cups of coffee.

“We are all millionaires, but we are poor.” Maigualida Oronoz, 43, is a nurse in Venezuela. According to the British newspaper The Guardian, her monthly minimum wage can barely buy one kilogram of meat to feed her children. .

She said that the current salary is only enough to buy some food to feed the hunger. If there is an emergency in the body, they will be helpless because "the price of medicine is too high and it is rising every day."

Not only nurses, but even university professors are faced with dilemmas.

According to Agence France-Presse, at the end of June, 41-year-old Jose Ibarra uploaded a photo of a cracked sole on Twitter and attached a text, "I wear this pair of shoes to teach at the Central University of Venezuela. I am at As a professor at the university, the salary is not enough for a new sole, but it would not make me embarrassed to say this."

It turns out that Ibra's monthly salary is only 5.9 million Bolivars. In this inflationary country, it is enough to buy one kilogram of meat, which is far from enough to pay 20 million Bolivars needed to repair a pair of shoes.

Situations like Ibala are common in Venezuela. The owner of the store, Lluvia Habibi, who plans to repair his shoes, pointed out that because raw material suppliers continue to push up prices, shoe repair is more expensive.

However, what is unexpected is that Ibala’s tweets have been received nearly 10,000 times. Today, he received 12 pairs of shoes, clothes and donations from netizens from Argentina, Colombia and even Spain.

Ibarra transferred nine pairs of shoes to others and intended to distribute some of the donations to the "most needed professors so they could buy food."

In fact, many Venezuelans cannot afford a delicious meal because of inflation. Ibrahim said his weight has been reduced by 15 kg. Because there is no money to buy clothes, an old sewing machine in his home is often used to cut some clothes that are a bit loose.

To make matters worse, public transport in Venezuela has also failed. Because passenger fares cannot pay for the replacement of tires, private bus companies can't operate normally, which makes people like Ibala, who usually take public transportation, be forced to walk.

New currency face value erases "five zeros"

As a country with the largest reserves of crude oil in the world, why is the economy of Venezuela caught in such a predicament?

Some analysts believe that more than 90% of Venezuela's fiscal revenue depends on oil exports. However, in recent years, oil revenues have fallen sharply, mainly because of the collapse of international oil prices and the continuous decline in production. In addition, government spending has lost control, so its economy has declined.

In this context, the government's printing of more and more money has led to a vicious circle, which has caused prices to rise rapidly and money to become less and less valuable.

However, the Maduro government believes that the sharp decline in Venezuela’s oil revenues is directly related to the economic and financial sanctions imposed by the US-led Western countries. The opposition accused the Maduro government of improper administration, resulting in soaring prices and shortages of food and medicine.

It is worth noting that data from the Organization of Petroleum Exporting Countries show that Venezuela's oil production fell to 1.5 million barrels per day in June, a record low in 30 years.

Werner pointed out that in the case of reduced oil production, it is expected that Venezuela's economy will shrink by 18% this year, which will be the country's third consecutive year of double-digit decline, and three percentage points more than predicted in May.

According to the Guardian, unlike Germany in 1923, Venezuelans did not take the cash of one car and one car to buy food and groceries. Instead, they turned to electronic trading, but 40% of Venezuelans don't have bank accounts, and people with bank accounts don't want to pay for smaller items with credit cards or bitcoin, so bartering has become commonplace.

In order to alleviate inflation, on March 22 this year, Maduro announced that he will carry out a new currency reform, issuing a new currency sovereign Bolivar from June 4. On June 2, the Venezuelan government announced that it would postpone the time until August 4th in order to give the banking system enough time to make the necessary technical adjustments.

On the eve of August, Maduro announced on July 25 that the time to issue a new currency sovereign Bolivar would be postponed until August 20th and linked to the country's oil coin Petro.

Maduro said that the government's goal is to "stabilize and change the country's fiscal life in a radical way." He pointed out that Venezuela needs an "economic revolution."

It is reported that 1 sovereign Bolivar will be changed from the original plan equal to 1000 current currency strong Bolivar to 100,000 strong Bolivar.

In other words, the new sovereign Bolivar erased the five zeros of the original denomination. The Maduro government hopes that the currency reform will help stabilize the financial market and financial situation in Venezuela.

However, economist Asdrubal Oliveros said: "This is a superficial solution that will have no effect. Such intense inflation will make us fall into the same situation again in a few months."

Some analysts believe that Venezuela's huge potential oil wealth will not give the country too much hope. Because the country's oil industry is plagued by poor management, lack of investment, cash flow and faltering infrastructure.

At present, no one knows how long inflation in Venezuela will last. Despite the sad days, Ibala still believes that "Venezuela can be saved."