Nov. 11 (Bloomberg) -- The government-ordered military occupation of a Venezuelan electronics chain has brought out a reserve force in its wake: a line of shoppers that stretched for three blocks from a store in eastern Caracas today.
“You have to take advantage of the government regulations because it was too expensive to buy before,” said Maryorie Cacique, 33, as she stood in the line with her three children in hopes of getting a 90 percent discount on an air conditioner in the army-occupied Daka store.
President Nicolas Maduro on Nov. 8 ordered the military to enforce an order that the Daka chain reduce its prices to October levels. Maduro, who is overseeing annual inflation of 54 percent, the fastest pace in 16 years, said Daka was overcharging customers by as much as 1,200 percent. He said the government will review prices charged in other stores.
Maduro, who was elected in April, accused merchants of usury and said he planned to impose limits on profit margins throughout the economy. He ordered the blockade of websites that publish the black market exchange rate and vowed to review three e-commerce websites including MercadoLibre.com to fight what he said was speculation ahead of Dec. 8 local elections.
Venezuela’s inflation rate has more than doubled since the beginning of the year as a shortage of dollars crimp imports in a country that buys 70 percent of its goods abroad. The scarcity index that measures the amount of goods out of stock at any given time rose to 22.4 percent in October, the highest level since January 2008, according to the central bank.
“There are no economic reasons for the shortages and price increases we are seeing,” Maduro said late yesterday in a national address in which he read the Koran, Bible and Torah. “This is not because of a lack of dollars. It’s political.”
The government, which devalued the bolivar by 32 percent in February to 6.3 per dollar, has been unable to arrest the decline of the currency on the black market, where companies and individuals not authorized to use the official rate pay around 60 bolivars per dollar.
Chief price regulator Eduardo Saman said Nov. 9 on state television that it’s illegal for stores to raise prices on existing inventory. The government has set prices for everything from medical services to flour.
The yield on the Venezuelan government’s benchmark 9.25 percent dollar bonds due in 2027 rose 19 basis points, or 0.19 percentage point, to 13.03 percent on Nov. 8 in New York, the highest since January 2012. The price fell 1 cent to 76.00 cents, according to data compiled by Bloomberg. The U.S. bond market is closed today because of the Veterans Day holiday.
“The measures are a negative signal for markets,” Barclays Plc analyst Alejandro Grisanti said today in a telephone interview. “They see an irregular economy, as the first announcements from the president provoked looting in several cities.”
Local press reported a Daka store in the city of Valencia was looted on Nov. 9. Maduro said the situation was quickly controlled and asked customers not to wait outside shops where price reviews are being conducted.
Cacique, who was standing in the middle of the 500-meter (1,640 feet) line in front of a Daka store in Caracas, was planning to pay 1,000 bolivars for an air conditioner. That would be a 90 percent discount compared to prices for new window air-conditioning units on auction website MercadoLibre.com, that ranged from about 10,000 bolivars to 30,000 bolivars.
“This is just the start of what I’m going to do to protect the Venezuelan people,” Maduro said. “I won’t accept the closing of stores. If a store is shut, it will be transferred to the employees.”
Customers must first enroll in a waiting list that is being administered by the National Guard at the entrance of the stores before buying the products.
“I don’t know if I’ll get a chance to purchase it, because there are a lot of people in front of me,” said Omaira Rondon, 44, who arrived at the Caracas store to wait in line yesterday afternoon. She said she was willing to pay 10,000 bolivars for a stove that had been priced at 50,000 bolivars.
Daka, which on its website says it’s the largest electronics chain in Venezuela, has five stores in the country and 500 employees. Venezuelan state television showed images of military officials in a Caracas Daka store inspecting prices of 32-inch flat-screen televisions. Calls placed by Bloomberg News to Daka weren’t answered.
Chavez, who died from an undisclosed type of cancer in March, seized more than 1,000 companies or their assets during his 14 years in office.
“I’m no looter, and neither are the Venezuelan people. Don’t fall into desperation,” Maduro said. “It’s the parasitic bourgeoisie that is looting Venezuela.”
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