Things that are scarce


I hate to discuss this, but it’s so shocking it needs to be told. Apparently the latest thing you simply cannot find in Venezuela’ shelves is … sanitary napkins. As if women needing to buy this product needed one more thing to foul their mood.

But you know what else you can’t find in Caracas either? Credibility.

Remember how on December 29th the government announced a devaluation of the official exchange rate?

Here is BCV director Armando León, on January 5th (I’m paraphrasing): “The exchange rate unification will not have an additional impact on inflation.”

Here is BCV President Nelson Merentes on December 30th: “Our econometric models tell us that the [devaluation’s] impact on prices will not be significant.”

Here is Finance Minister Jorge Giordani on December 30th: “The [devaluation’s] impact will be minor, because we now have more judicial transparency and a stronger financial sector.”

Here is “vicepresident” Ricardo Menéndez on January 3rd: “The [devaluation] may even help lower prices.”

Guess what? Inflation in January alone was 2.8%. In January of last year, it was 1.7%. In December, it was 1.8%. The probable cause for this inflationary spike? Oh, I have no idea…

So next time you hear the economic gurus of the government spouting off predictions that make no sense, remember: they have no credibility. Sanitary napkins are far from the only thing you cannot find.

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  1. Just to be contrarian here, I think our government apparatchiks have a point for once. There’s a difference between the inflation RATE and the price level. A one-time jump in the price level need not affect the ongoing RATE at which prices rise. I think you’re the one who taught me this Juan, ¿no?

    BTW, what really can hit the inflation rate is crazy financing shenanigans such as PDVSA’s Madrugonazo Bond from last night.

    • Let me clarify: aside from el loco Menendez who clearly said devaluation would help lower prices, they all talked about “impact.” Well, a spike in the inflation rate, even if it’s a one-time thing – that’s impact. Long-term it’s not, but in the long term we’re all dead.

      • obviously normal people don’t really differentiate between “rise in the price level” and “rate of inflation”, so it’s probably idiotically nit-picky, my point.

        • The next time we hear the government say something will not have an impact, we should expect a 50+% increase in the monthly rate of inflation.

        • Actually, no, your point is not nit-picky. You’re simply putting words in their mouths. I don’t think they were being that specific, they were simply lying and spinning.

          • Certainly.

            The inflation rate is the growth in prices from one period to the next. Typically, one looks at inflation over a month, but also over longer periods of time (a year, several years). But inflation in general refers to longer periods of time. If the price of tomatoes go up in one month and stay there, that’s not inflation really – that’s a one-time jack-up in prices. But if the prices of tomatoes and everything else goes up *every* month, that’s inflation.

            The argument here is whether devaluation causes a one-time jump in prices, or if it increases the medium-to-long term inflation rate.

            Some people argue that while a devaluation causes things to up, over a longer period of time it won’t have an effect on “inflation” because the underlying roots of a *sustained* increase in prices – namely, governments printing money loosely, or too much money following too few goods – are not affected.

            So the debate is basically: does it jack up prices once and that’s it? Or does it lead to a generalized rise in long-term inflation?

            The answer is that, more likely than not, the jump in prices is immediate. However, the constant need for devaluing, which comes from an ever-increasing need for government funds, is a sign that there are powerful inflationary forces at play as well. So the devaluation itself is a symptom that the government keeps on printing money to make ends meet, and that leads to long-term inflation. In fact, it likely leads to future devaluations.

            My beef with Quico is that it’s not like the statements from the government touch on any of this nuance. They said it would have no impact, and they were wrong. A 2.8% increase in a given month – that’s impact.

            Hope this wasn’t too wonky!

  2. You guys have no idea how frustrating this is. I don’t know about other women, but I spent most of my young years trying different types and brands of sanitary napkins until I found the right one, and stayed true to my pick. It’s like picking the right deodorant, what works for me doesn’t work for someone else. Last week, I went to buy my regular brand/type but there was none to be found, just Farmatodo Brand (HELL NO!) and another obscure brand called ALLFREE… no stayfree, no kotex, no allways, no modess, no tess… I’m sorry, but if this gets worse, it will probably get to the point of women overthrowing the goverment, PMS is not to be taken lightly…

  3. Not to be contrarian but the inflation “spike” you mention is more likely than not just random variation. 5 minutes on the BCV website show there have been 4 similar spikes since 2008 (3.1% spike in Jan 2008, 1.5% in May 2008, 0.8% in March 2010 and 2.8% in April 2010), if by spike you mean a sudden jump in monthly inflation. The 2008 spikes were pretty far from any devaluations , though the 2010 ones were relatively shortly after. That isn’t to say the most recent devaluation will have no effect on prices (it most likely will), just that the evidence you’re basing your conclusion on proves very little.

    • True, it’s an empirical question. I don’t see what the basis is to say that it’s “more likely than not” just random variation. But it could be.

      I tend to think the unanticipated devaluation is the most likely answer.

      • Don’t forget that a major factor in inflation is expectations. (This tends to even out over time, so doesn’t contradict Friedman.) If people hear devaluation, and therefore expect inflation, then there will almost certainly be a bump. So the devaluation could have caused that one-time jump simply because people think it would. Though I’m inclined to believe that, since the rate change did make some things more expensive, that it did have a real impact.

  4. They’re just following the lines of the Mexican revolution:
    Un mexicano le dice a otro:
    -¡Que viva Sancho Villa!
    -¡Que viva!
    -¡Que viva Zapata!
    -¡Que viva!
    -¡Que viva la menstruación!
    -¿? ¿Compadre, no será la revolución?
    -¡Pos igual, que corra la sangre!
    (And of course you can delete this, since it is totally worthless and probably didn’t even make you laugh).

  5. This is such a terrible subject, but it needs to be addressed!

    We are becoming like Cuba. Sanitary napkins are a luxury most Cuban women cannot have. They still use those cloth napkins (dare I say it? washable!), that were the standard during the days of our grandmothers.

    Let’s say that a ‘friend’ of mine went to Cuba and a girl belonging to her tour had the need to buy pads while on vacation in the island. Let me tell you: it was a big, big crisis. All the people in the tour learned that the girl was menstruating.

    Same tour: they asked for steak and fries in the hotel restaurant. The waiters began to speak in secrecy between them and brought the worse meat in the world. By the way, as thin as paper.

    Scarcity is the norm nowadays here. I spent the whole morning buying the groceries and had to go to 2 supermarkets, 1 municipal market, an importer and a couple small stores.

    • But.. but.. Cuba is an island under a trade embargo, with virtually no GDP, limited manufacturing and foreign trade. None of that applies in Venezuela. The controlled foreign trade, diminshed manufacturing sector, and whatever else is imposed on the country by the government is the cause for scarcity? When will Venezuelans finally tire of this and respond, rather than just adapt?

  6. Price spikes in January somehow might have no “effect” on inflation. They have the same cause though.

    If in anything these price increases have a different cause, it’s in the distorted price structure forced by the government’s assault and “regulation” of the private economy.

    They are also adjustments, in part immediately following devaluation (given that Venezuela imports a lot of necessaries). Devaluation was deemed urgent because… there’s more Bolivars chasing fewer dollars, as well as fewer tomatoes, sanitary napkins, houses, etc.

    Because the government prints loosely (increases the money supply).

    Anyhow, whatever spin they might put on it, the government’s “economists” should be busted twice.

  7. This is going to continue. The Government has yet to authorize increases on regulated products, you have to prove your inventory runs out before this will happen. The Government is also playing hardball with companies telling them to limit price increases. What this means is that we will get abnormal rises until at least April.


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