The Washington Post
August 12, 2008
CARACAS, Venezuela -- Venezuela raised the regulated prices of foods ranging from bread to beef by up to 50 percent and removed price controls from other goods on Tuesday in a bid to ease sporadic shortages in supermarkets.
The move, which affects 15 basic foods with price hikes from 20 to 50 percent, generated fears of an upward tick in already high inflation in Venezuela, whose government is trying to move the South American nation toward socialism.
Eduardo Saman, president of the state-run Institute for the Defense of People's Access to Goods and Services, said the price adjustments would have a minimal effect on inflation. He argued it may even help keep prices down by encouraging vendors to heed price controls instead of selling goods "at whatever price."
But economist Orlando Ochoa said that while the price adjustments may curry favor for the government prior to November's local and municipal elections, inflation will "continue to rise."
Annual inflation in metropolitan Caracas reached 33.7 percent in July.
The government said that foods in high demand, such as prime cuts of beef, went up 50 percent to US$8 per kilogram (US$3.60 a pound), while pasta went up 23 percent to US$1.57 per kilogram (71 cents a pound). Bread prices increased 49 percent, reaching US$2.06 per kilogram (94 cents a pound).
The government removed price controls for items including oatmeal, salt, and special pork cuts.
The measures went into effect on Tuesday.
Since 2003, the government has imposed price controls on many basic foodstuffs to combat inflation _ pushing some producers who can't turn a profit to pursue other lines of work and causing sporadic shortages.
The Central Bank said last week that in July, 12 percent of the products that make up the basic food basket _ which is used to measure inflation _ had experienced shortages.
The institute will begin inspecting businesses on Wednesday to make sure they are complying with the price adjustments, Saman said.
Alberto Cudemus, president of the Venezuelan Pork Federation, applauded the price adjustments, which he called "very important."
Cudemus told Venezuela's Union Radio that the new prices for pork will guarantee that production will be profitable.
But Tomas Ramos, president of the Venezuelan Bread Industry Federation, said that bread still cannot be produced profitably even at the new prices. He added, though, that bakers hoped to keep the market supplied.