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Caracas: more expensive than London?

How can a city in a developing country be the world's 15th most expensive — and how do the poor get by?

But for middle class and poor Venezuelans the parallel rate is double-edged sword — and it is here where Mercer’s report rings true, said Oliveros. Many companies who import their products index their prices according to the black market rate.

Venezuelans who can earn in foreign currencies are “not even 5 percent of the population,” he explained. “Only 5 percent of the population has very high acquisition power, dollar accounts and can protect itself from devaluation. The rest of us mortals are subject to these conditions. Caracas is expensive for 95 percent of those who live in it.”

According to the National Institute of Statistics, the average income for a Venezuelan household is 2,342 bolivars a month which makes it the highest in Latin America, but only if calculated at the official rate. It is significantly lower when calculated at the black market rate, or when inflation is taken into account.

To counter spiraling prices, the government has introduced regulated prices on essentials such as food, medicines and utilities. About 50 percent of Venezuelans use government-regulated food markets known as "Mercal" and many claim it and other social projects have improved their ability to subsist. “Thanks to God we have a president who gave us so many misiones (social projects) to help the poor,” said Carmen Liendo, 39, outside a Mercal in the Caracas barrio of San Agustin. “Here those who have less economically can buy their food.”

But others complain that Mercal offers poor food quality, frequent shortages of basic staples and long lines. “I don't like it much,” said Victor Gonzalez, a 50-year-old construction worker from Petare, Caracas’ biggest barrio. “The meat is really bad, the flour, the milk. To queue for three or four hours to buy chicken I prefer to spend 10 Bs more and go somewhere where there are no queues.”

Nicolas Toledo, from the Caracas-based market research analysts Consultores 21, said many of Caracas’ poor survive by living in "invasiones" or squats high above Caracas in its many barrios with no running water and electricity siphoned off the main circuit. A poll conducted by his company found that almost all lower middle class young still live with their parents and spend most of their salary on rent, food and utilities. Almost all members of the lower middle class do not have bank accounts.

“If you are young and want to be independent your options are to rent a room in a rancho or set up your own invasion,” said Toledo. “You can’t even dream of living in the city.”