Monday, April 7, 2025

Bolivians tighten their belts after a new reality of inflation bites

April 7, 2025

Angelica Zapata, a Bolivian homemaker in La Paz's highland, is learning to accept a new reality of inflation. Prices are rising at their fastest rate in nearly two decades due to the shortages in fuel and dollars.

Landlocked gas and grain producers are facing their most severe economic crisis since the global financial crises. Foreign currency reserves have been dwindling due to stalled exports and energy production, which has stoked unrest and protests. The dollar shortage is causing imports to be stymied, driving up farmer's costs and resulting in long lines at the gas station. The dollar shortage has also put pressure on the state-subsidy system, which for years kept fuel prices low.

Zapata, at a market in La Paz's political capital, a city of rocky peaks surrounded by Andean peaks, said: "Everything is too expensive. There's no more money."

"I would go to the supermarket with 100 bolivianos and buy everything. The money lasted for over a week. What I buy doesn't last me any longer, because I have many daughters. "These vegetables will only last me a maximum of one or two days."

She said that the price of meats like beef, pork and chicken had increased even more. Prices were now "sky high."

Bolivia, one South America's most impoverished nations, produces a large amount of its own food and has historically enjoyed a natural gas surplus, which kept energy costs low. However, producers have failed to find new gas fields that can replace the ones that have been depleted, which has reduced exports, and a major source of foreign revenue. The socialist party, which has been in power since 2006, has subsided certain goods. However, it is now struggling with the economy and has dented President Luis Arce’s popularity before August’s general elections.

Bolivia's inflation has surpassed regional peers like Brazil, Mexico, and Peru. Only Argentina and Venezuela are now behind Bolivia, and inflation is cooling in both countries.

Gas production is declining, forcing the country to import oil and gas at higher prices. This is a vital input for businesses and farmers, and has in turn pushed other prices up.

Food inflation is currently 17%. However, there are some foods that have increased even more in recent months or the past year, according to La Paz economist Jose Luis Evia. He added that rice prices rose by 58% over the last twelve months, while meat prices went up 30% and fish prices shot up 40%.

"ONE MEAL A Day"

The inflation rate has caused the Zapata family to tighten its belts.

We've had to reduce our food intake. Zapata explained that he could only feed his daughters one meal per day.

Many families with many children also go through this. "The money we receive is not enough."

Fuel lines are long due to the crisis. Some people want to increase production by removing controls and increasing subsidies, even if it means higher prices.

Samuel Castillo, a taxi driver who was in line to purchase gas, said: "I'd like them to remove the fuel subsidy to ensure that there is more gas so we don't have to wait and can fill up normally." Bolivia's government has not responded to a question about what it is doing to reduce inflation. The government has taken measures to import more fuel and to allow firms to pay with cryptocurrency for imported goods.

Castillo has been working extra jobs in order to survive.

"I must work as a carpenter and painter, as well as a woodworker. "I have to do a little bit of everything in order to earn more," he said.

(source: Reuters)

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