CARACAS, (Reuters) – Venezuela is creating a new agency to limit profit margins for companies operating in areas such as food and medicine, the vice president said on Monday, in the latest effort to boost state control over the economy.
The agency aims to control inflation in the OPEC nation, which has one of the highest rates in the world, by stopping businesses charging “usurious” prices that state officials deem are far above their costs of production.
“This law is meant to confront those speculators who have for a long time been pillaging Venezuelans’ right to live in dignity,” Vice President Elias Jaua said during televised remarks, adding that the move was not an attack on the private sector.
The law creating the new agency will be published officially on Tuesday, he added.
Venezuelan inflation for the 12 months through June totaled 23.6 percent. High prices are among the top concerns for Venezuelans and a major headache for socialist President Hugo Chavez, who was already facing a tight reelection bid in 2012 before disclosing that he had cancer.
He is receiving treatment in Cuba.
Critics say the new move to control inflation could worsen periodic shortages of staple goods that have been a thorn in the side for the government.
“If this is fully applied, it will steadily lead to a wartime economy,” said Jorge Botti, head of the country’s principal business group Fedecamaras, in an interview with local radio.
But government leaders may selectively enforce the new regulations to target high profile businesses while leaving smaller companies relatively untouched, as it has done with its existing set of price controls.
The new agency will establish a national registry of production costs for different products, and use this to determine a “fair” profit margin for companies.
Jaua said the government would spend 90 days establishing that registry through public consultations with industry.
The regulations will cover sectors including construction materials, clothing, health services and education. Failure to comply could result in fines or even expropriation.
Chavez created a system of price controls in 2003 for staple products such as coffee, corn flour and meat that are closely enforced at large supermarkets but routinely flouted by small businesses.
Critics say increased enforcement of those price controls resulted in a rash of product shortages in recent years.