By Monica Machicao
LA PAZ (Reuters) – In Bolivia’s highland city La Paz, homemaker Angelica Zapata is coming to terms with a new inflation reality as prices rise at the fastest speed in almost two decades, propelled by shortages of fuel and dollars in the Andean country.
The landlocked natural gas and grain producer is facing its most acute economic plight since the global financial crisis, with foreign currency reserves sliding on stalled energy production and exports, which have stoked political unrest and protests.
The dollar shortage has stymied imports, pushing up farmers’ costs and leading to long lines for gasoline and diesel at the pump. It has also strained a state subsidy system that for years helped keep fuel prices low.
“Everything is so expensive, there’s no money left,” said Zapata at a food market in political capital La Paz, a rocky city ringed by Andean peaks.
“I used to go to the market with 100 bolivianos ($14.58) and buy everything. It was enough for more than a week. I have several daughters, and what I buy isn’t enough anymore. At most, these vegetables will last me one or two days.”
She added the cost of meats such as beef, chicken and pork had risen even more and prices were now “sky-high.”
Bolivia, one of South America’s poorest nations, grows much of its own produce and historically had a surplus of natural gas, keeping energy costs down. Producers have not found new gas fields to replace those that have been tapped out, however, reducing exports and an important source of foreign income.
The socialist party that has dominated politics since 2006 has subsidized certain goods but is now struggling to keep the economy afloat, denting President Luis Arce’s popularity ahead of general elections in August.
Bolivia’s inflation rate, one of the lowest in Latin America over the last decade, has shot past regional peers such as Brazil, Mexico and Peru. It now lags only Argentina and Venezuela, and even those countries are seeing inflation cool.
Dwindling gas production has forced the country to import more costly oil and gas, a key input for farmers and businesses, which in turn has pushed up other prices.
“Food inflation is 17%, but there are foods that have risen even more significantly in recent months and the last year,” said La Paz-based economist Jose Luis Evia, adding that rice prices rose 58% in the last 12 months, meat prices climbed 30% and fish prices spiked over 40%.
‘ONE MEAL A DAY’
In the Zapata household, inflation has forced the family to tighten their belts.
“We’ve been forced to cut down on food. I have to give my daughters only one meal a day, just lunch, but no longer dinner,” Zapata said.
“Many families with lots of children are also going through this. The money we get is no longer enough.”
The crisis has generated long fuel lines, with some people calling for the government to remove controls and increase subsidies to encourage more production, even if that means prices rise further.
“I would like them to lift the fuel subsidy so there will be more gas and we can stop waiting in lines and fill up normally,” said taxi driver Samuel Castillo as he lined up to buy gas.
Bolivia’s government did not respond to a request for comment on what it was doing to bring down inflation. It has taken steps to import more fuel, including allowing firms to pay for imports with cryptocurrency.
Castillo has taken on extra jobs to make ends meet.
“I have to work as a driver, as a wood and aluminum carpenter, as a painter. I have to work doing a bit of everything to earn more money,” he said.
($1 = 6.86 bolivianos)
(Reporting by Monica Machicao; Editing by Adam Jourdan and Rod Nickel)
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