International media outlets are continuing to misreport the economic crisis in Venezuela and the effect of high inflation on the cost of living.
On Tuesday, the Los Angeles Times published a story claiming that, “It costs US$150 to buy a dozen eggs in Venezuela right now.”
The newspaper backs up that claim by using an exchange rate of 10 bolivars for one U.S. dollar, according to which a woman in Caracas who buys a carton of eggs from a street vendor for around 1,500 bolivars is paying “a staggering US$150 at the official exchange rate.”
But the article uses wrong exchange rate for the example. In Venezuela, companies that import basic goods pay an exchange rate of 10 bolivars per dollar—a subsidy meant to encourage a steady supply for those goods—but not regular Venezuelans. That woman in Caracas, by contrast, would receive 520 bolivars for every U.S. dollar she exchanges, which means that for her a dozen eggs would cost less than US$3.
That Venezuela uses multiple official exchange rates—last year there was three, in addition to the black market rate—has been a source of confusion, and also exploited for disinformation.
International media reports often cite the subsidized exchange rate for importers, known as DIPRO, even though it only applies to imported goods, services and remittances which are identified by the government as a priority. Using that rate to calculate the cost of living for a resident of Caracas paints a much more dire and misleading picture of the economic reality, however troubled it may be.
As for Venezuela’s high rate of inflation, little international reporting on the issue notes the central bank’s assertion that much of it is the result of currency manipulation, or rather: wealthy Venezuelans bringing in U.S. dollars and exchanging them for that 520 to 1 rate.