Why are products more expensive in Venezuela than in other countries?

 
It is interesting to see that Venezuela has the most expensive products in America, if we compare them with other countries we can see that they double, some triple and others quadruple the price.    

The prices of the products are established by different factors such as supply and demand, the percentage of interest of each country being that of Venezuela of 30% and the costs associated with production. But in Venezuela it is the country of the impossible, if you look, the government subsidizes almost all services so they should not have much cost, let's see some factors that generate costs and are practically the same for each country in the world. 

a) Raw material (extraction, storage and transport).

b) Manufacturing.

c) Technology (reduces the cost by producing more products and with greater efficiency).

d) Services and resources used (water, gas, electricity, internet, among others).

e) Storage.

f) Transportation

g) Salary.

 
If we look and compare some of these costs with other countries, we see that Venezuela has a great advantage, let's compare with Colombia:    

Factor                                             Colombia ---------- Venezuela 

 Petrol (100 liters)                            72.9 $                       0.0045 $

 Salary (5 people in a month)          1260 $                      14.75 $  

Electricity (1000 Kw / H)               11980 $                        520 $  

Total:                                               13312.9 $                      534.75 $

 If we make the comparison we see that the cost in Venezuela only represents 4% than that of Colombia, but still the price of products in Venezuela is 2 times more expensive than in its neighboring country Colombia. And there are many factors that nobody tells that cause prices to skyrocket, such as:

 1.- INFLATION:
Although inflation is an increase in prices or losses of the value of the bolivar (national currency), this is an essential factor and is that it is so, so but so high that even the dollar is not saved, we can think that before inflation so high the solution is to buy dollars and have them saved and in the future sell them and buy the same amount a while ago, the truth is that not even the dollar has a future. A price study showed that today the dollar in Venezuela buys 30% of what it bought last year (2018), this is that inflation increases faster than the dollar-Bolivar exchange value. In 2018, inflation in Venezuela was 1,300,000% (IMF), or 100,000% (Central Bank of Venezuela), the devaluation of the currency was only 71,986%.



2.- SHORTAGE:
a product can easily increase in price when it is scarce somewhere, for example, in a tropical country mangoes are cheap and strawberries are cheap in a cold country, this is because of the climate required by each fruit and they are expensive in countries where they cannot be sown. In Venezuela there is a shortage of food of 80% and medicines of 90%, as there are not many stocks and many people depending on the same product it is normal for its price to increase. imagine a sale of wheat flour with little existence and high demand, it is sold for 1 Bs to one person, another person to see that he will not have more opportunities to buy again, he says: look, I give you 2 Bs, and another person to not being left behind offers 3 Bs and a war for the product begins, a law of life called supply and demand. Imagine being in a desert and seeing a single bottle of water for sale, it is notorious to think that you will fight for it.



3.-IMPORT:
Since there is a shortage, it is reasonable to think that this would come, if there are no products, it is best to buy them in another country, the problem with this is that a new cost is added that is the tax / customs and shipping. To give an example, a shipment of ice cream in the United States has a cost of $ 640, but to import it costs $ 1400 (for certain conservation factors), when arriving in Venezuela it costs $ 2040.

 

 4.- EXTORSION, INSURANCE AND CORRUPTION:
To believe that the price of importation is the last thing is to be wrong because from the port to the store there is a long road that must be taken care of and in Venezuela corruption does not help much, the guards and military usually steal the products halfway in the famous alcabalas, pro what, you must pay the extortion that will depend on the type and quantity of product.



5.- INTERMEDIARY:
This is no more than the times when a product changes hands to the end customer. And it is that everyone must earn something, it would be much cheaper to buy a product directly at the factory than in a store, the problem comes because the factories sell them in large quantities and not everyone has the money for all that amount.



6.- SPECULATION:
As inflation rises and rises, prices must rise, since inflation is not controlled and exceeds 1,000,000% per year, it is normal to worry about not having economic losses, given this, many traders anticipate the price increase, increasing and wanting to charge above the current one, on the occasion that, the time it would take to sell the merchandise in the national currency and then buy the same merchandise again, is enough to have economic losses due to inflation. It is like selling a product at 10 Bs and when it is restocked again it ends up costing 20 Bs (loss of 10Bs).