Venezuela: Cup of Coffee Soars to 2,000,000 Bolivars ($0.57)

The cost of a cup of coffee in Venezuela is higher than ever as projections show the socialist country is on track to hit one-million percent this year.

Bloomberg News’ Cafe Con Leche Index measured this week that a single serving of java hit an eye-watering 2,000,000 bolivars this week, a sharp increase of 600,000 bolivars from last week’s price of 1,400,000 bolivars and up a total of 1,810,000 bolivars since the end of April. “That three-month increase equates to an annualized rate of 1,227,638 percent. (The trailing 12-month inflation rate, while still out of control, comes in much lower for now: 86,857 percent.),” the business publication reports.

According to official government conversion, the two million bolivar price tag is the equivalent of about $17. Yet according to Dolar Today, which keeps track of the real value of the bolivar independent of socialist price controls, the real value of 2,000,000 bolivars is $0.57.

Venezuelan dictator Nicolás Maduro unveiled plans Wednesday for combatting runaway inflation by printing new paper money with five fewer zeros. The announcement came two days after the International Monetary Fund warned that Venezuela’s inflation could top a staggering one million percent this year. Maduro claimed the monetary conversion will spark “great revolutionary changes in the economy, which Venezuela demands.”

Venezuela sits atop the world’s largest proven oil reserves, but it is five years into an economic crisis with shortages of food and medicine that is driving mass migration.

The new bills will begin circulating August 20.

Paper money is hard to get in Venezuela, where the largest bill today is the 100,000-bolivar note, equal to less than one cent on the commonly used black market exchange rate. A simple lunch easily costs three million bolivars. The new paper bills will have denominations ranging from two up to 500. The lowest represents the buying power of 200,000 current bolivars, the highest stands in for 50 million.

Printing new money is a move Venezuela has taken before to combat soaring inflation that requires more and more bolivars to make a purchase. In March, Maduro announced that Venezuela would print money with three fewer zeros, but it was never carried out, and inflation continued to soar. On Wednesday, Maduro spoke on national TV to his economic team, also vowing a renewed focus on Venezuela’s failing oil sector, but providing no details for improving crude production.

Early this week, IMF officials compared Venezuela’s economic turmoil to Germany’s after World War I and Zimbabwe’s at the beginning of the last decade. They said Venezuela’s economic fall was among the world’s deepest in six decades.

The Associated Press contributed to this report.