Chavez Creates Agency to Supervise Prices, End Speculation

Venezuelan President Hugo Chavez signed a price regulation law today that he said will create a new government agency to supervise the price at which goods are sold and “end speculation.”

Chavez said he was creating a “fair price and costs” law to stop speculators from “pillaging” Venezuelans and running off with the majority of the profits.

“This is another law to fight against the injustice of capitalism, to protect the people, the whole nation -- except the exploiters and speculators, of course, who monopolize production, hoard, hide and inflate prices and costs,” Chavez said in comments carried on state television.

Chavez blames price gouging for fueling inflation in Venezuela, which at 23.6 percent is the highest among 78 economies tracked by Bloomberg. The government already controls the price of more than 100 basic food goods.

Nicmer Evans, a political analyst at the Central University of Venezuela who headed up a commission last December to assess the law, said the idea is to tackle inflation at its roots.

“There’s a culture among Venezuelan businesses of wanting to earn no less than 50 percent and with expectations of between 100 and 150 percent over the original price,” he said in phone interview May 3, when the plan for the law was first announced. “The idea is not to tackle inflation’s consequences but rather the causes.”

The price regulation agency will set maximum profit margins, Evans said. Each product will be assessed on merit.

To contact the reporter on this story: Charlie Devereux in Caracas at cdevereux3@bloomberg.net.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net