Some places are much easier to gather price data than others but Caracas, with its stock shortages and exchange rates, isn’t one of those. Below my colleague, Rachel, offers some great insight into life in the Venezuelan capital. Enjoy – Mark!
“You’re going to Venezuela? Will there be toilet paper?!” This is what most people wanted to know, after seeing shortages of this commodity hitting the headlines earlier this year. Well, you can be reassured that when I visited there was no noticeable lack of toilet paper! However, shortages of many other items are common and queuing for them is a growing part of daily life in Caracas.
With the last official reported inflation at 63%, food prices soaring and the official exchange rate fixed at 6.3 bolivars (BsF) to the US dollar, Caracas has become, by a long way, the most expensive city in the world in our Cost of Living survey when using the official exchange rate (more on that below). However, despite having the world’s largest oil reserves, life in Venezuela is complicated, with shocking shortages of staple goods, a flourishing black market and much government intervention.
At first glance, I couldn’t see anything amiss. Arriving into the Sambil Caracas Mall I saw a busy, thriving shopping centre, no different from those we IDRs experience the world over. Music was playing, there was a dance show in one of the main atriums and throngs of people clutching internationally branded shopping bags bustled past. Shortages? Pah. Seeing the window display full of mannequins dressed in the latest fashions, I entered Zara, confident of finding everything I needed. A scant two minutes later I ‘hung-up’ my voice recorder, having priced everything in sight. The shop was a normal-sized Zara, with shelves, rails, changing rooms and lots of staff but the stock was reduced to two singlerails of mis-matched clothing and a pile of shoes. This happened again and again: well-staffed shops, extravagant window displays, busy shopping centres, but empty shelves. This image stayed with me long afterwards and is an interesting analogy for the country itself; proudly displaying its finest in the window in a brave attempt to hide the fact the shelves inside are empty.
Before we go anywhere, a Cost of Living analyst at ECA will identify items we need more information about. Unsurprisingly, there were many for Caracas, one being coffee. It astounded me that a country in South America could suffer a shortage of coffee, but apparently it is one of the most-missed items, especially given its important status as a social lubricant. After visiting seven supermarkets and not finding a single packet, I was very pleased to find an entire aisle of coffee in a government-run supermarket. Commonly, when a shop did have stock of an item, it was of just one type, and that was the case here. But then, no price in sight! With constantly changing prices, retailers in Venezuela often eschew normal price ticketing; dated pricelists of every item in the shop/restaurant were a common sight, while supermarkets mainly rely on self-serve price-checking terminals. Unable to countenance returning to London without a price, I thought my only option was to buy some.
It wasn’t that simple. Hoarding is another big problem in Venezuela; a natural response to the lack of availability but ultimately exacerbating the shortages. Some people simply buy as much as they can, when they can, for their own use, but some items (rice, sugar, coffee, cooking oil and famously, petrol) are price-controlled by the government and a significant proportion of these items are bought cheaply in bulk in supermarkets then sold on the black market. To counteract this, the government has adopted a range of controls, first restricting the number of controlled items you can buy in one transaction and, more recently, needing to know your identity before you can buy anything. Venezuelans have an ID card which they hand over at the beginning of each transaction but I, obviously, had no such thing. Without one, the cashier said “I can’t sell this to you” until she gathered I was foreign, at which she said my passport would do, taking my name, date of birth, nationality and passport number before requiring an address. As far as I was aware it wasn’t illegal to buy coffee, but I felt nervous. Apparently they’re even thinking of installing fingerprinting machines at checkouts, which would make this feeling even worse!
Later, in a different shop, a security guard stopped me, gesturing at my bag. Fearing I’d be searched on suspicion of shoplifting, I was relieved when he simply asked where I’d got the coffee. I’d heard that the best way to shop in Venezuela is to keep your ear to the ground and as soon as you hear what you want is in stock somewhere you drop everything, rush to that shop and join the queue – the bush telegraph in action! Grocery shopping in Caracas today can be a full-time job.
As Caracas is a potentially volatile city, with a high crime rate, I had a car and driver the whole time and I offered my driver the coffee I’d bought (addicted or not, I couldn’t consume 2KG of coffee in 2 days). This turned out to be an inspired decision. Having previously accepted tips with all the impassive professionalism of the high-quality taxi driver, the coffee made his mask slip. He seemed genuinely touched, asking if I was sure I could spare it and spending ages chatting about the realities of shopping in Caracas before exclaiming happily, “Oh, my wife will be so pleased!” His response far exceeded the monetary value of the gift (the smallest of my tips would have covered several bags of coffee).
Of course, no blog about Venezuela could fail to mention the currency issues. It is common knowledge that Venezuela operates multiple exchange rates. What’s less obvious is which rate expatriates and visitors will have access to. When I was there, the official rate was 6.3 BsF to the US dollar, black market rate 92 to the US dollar and I’d heard much about the SICAD II rate of 50 but had no idea how to access it. This made budgeting mind-boggling – my taxi from the airport at 1500BsF could have been $240 USD, $30 USD, or $16 USD depending which exchange rate I could use! Regular readers of my colleague Andy’s blog MoneyMoves, will know that currency concerns are one of the biggest headaches for expatriates and international companies in Venezuela; I’m glad I only had to budget for a 5-day trip! And I wish I’d known in advance that my UK credit card would get the SICAD II rate.
The currency concerns aren’t limited to expats either. With rampant inflation and a scarcity of goods so pronounced the government has stopped publishing its scarcity index, locals without access to the black market are finding it harder and harder to survive and are resorting to desperate measures, one of several reasons explaining why Venezuela has become the most dangerous country in South America. The government has stopped publishing its own crime statistics but the Venezuelan Observatory on Violence (an NGO), estimates that 24,000 people were murdered in 2013 alone, with nine out of ten homicides going unsolved. It is also a highly weaponised society – gun crime is a significant problem and all of the malls I visited had a “no firearms” sign. More than the currency headaches, more than the lack of goods on the shelves, it is security concerns that make Caracas a difficult place for expats. While I was there I saw nothing unsettling, I received nothing but friendliness and kindness from locals, the weather and scenery were beautiful, yet, knowing that danger could be round the next corner, that the next person I saw could be the one to rob me (or worse) and that I was alone in an unknown and dangerous place, was exhausting. In Curacao my hotel owner told me of her friend who was having trouble readjusting after a stint in Venezuela – likening it to post-traumatic stress disorder; nothing had ever happened but she had lived the whole time in constant, exhausting fear.
I don’t know what will happen to Venezuela. It feels like it must be nearing a tipping point and something has to happen. Especially with the drop in crude oil prices, it’s hard to see how the current situation can be sustained, despite the government’s best efforts to make the world believe otherwise. It’s sad, for this is a beautiful, welcoming country with so much potential.
Still, there’s some short-term consolation. As the festive season starts, the government is introducing some new “sweetening” measures as part of “Operation Merry Christmas”, including subsidised appliances, clothes and toys, the most popular of which has been the plastic “Barbie” doll. So if you’re in Caracas this Christmas, I wish you luck and patience finding ingredients for your Christmas dinner, unless perhaps you fancy a “Barbie”?
Rachel is part of ECA International’s International Data Research team. She travels the world regularly, capturing price data for goods and services to assist with cost of living comparisons around the world.