A cup of coffee now costs 1 million bolivars in Caracas. It’s a surprising amount of money. Consider that just two years ago, when we launched the Bloomberg Coffee With Milk Index, a coffee cost 450 bolivars. Or that today’s price is equivalent to almost one fifth of the monthly minimum wage. Or that to buy a cup with the most common banknote in circulation – the one with 100 bolivars – he would have to put together a lot of 10,000 of them.
However, at the same time, 1 million bolivars really is nothing. When converted to dollars, they are only US $ 0.29. This contrast – a coffee consumes a large part of a worker’s monthly salary, but costs only a few cents – illustrates the devastating effects of hyperinflation and how it can impoverish a society.
With the latest price increase -from 800,000 bolivars just a week ago- inflation in the last twelve months in Venezuela rose to 43,378%, according to the index. And if the panorama of the last three months is analyzed and this rhythm is projected to a full year, an even more sombre picture is observed: an inflation of 482,153%.