CARACAS, Venezuela (AP) — President Hugo Chavez expressed optimism on Tuesday that new rules broadening price controls will help his government curb high inflation.
Invoking the ideals of Russian Marxist Vladimir Lenin, Chavez said the Law for Fair Costs and Prices would prevent unscrupulous businesses from unjustly raising prices, and he urged government officials to implement the regulations as soon as possible.
"This is a law to protect the people from capitalism," Chavez said to a crowd of officials and government supporters gathered in the capital's poor 23 de Enero district. "We have a tough battle ahead."
While price controls already exist for some basic foods such as cooking oil and rice, the law taking effect Tuesday extends them to a wider range of goods and gives the government more enforcement authority.
Business leaders have warned that more extensive and stringent regulations will reduce investment and cause problems for consumers, including shortages of products in high demand.
Government officials argue the law will help reduce Latin America's highest rate of inflation by forcing businesses to set retail prices at levels established by authorities.
Among the factors that officials will consider are production costs such as raw material prices and worker wages.
Chavez said soaring inflation "is one of the biggest problems we have."
Venezuela's Central Bank announced last month that the annual inflation rate had edged back up to 26.9 percent in October. It was 27 percent last year.
Government officials have set a goal of holding inflation to between 23 percent and 25 percent by year's end, but many analysts predict it could climb higher.
High public spending, coupled with government-imposed currency controls, are among the factors driving up inflation in Venezuela.
Currency-trading regulations block people from buying hard currencies such as U.S. dollars or Euros, pushing many to quickly spend local currency before prices rise. Low domestic production and hurdles to imports such as cumbersome bureaucracy have also created shortages of many goods, which have led to price hikes.
The government has said price gouging holds much of the blame for the high prices.
Chavez accused large transnational companies and local monopolies of "exploiting the people" by unjustifiably boosting prices.
"Whenever we increase salaries, they immediately raise prices," he quipped.
Karlin Granadillo, a government official responsible for establishing and applying new price regulations, said Monday that officials are not ready to immediately apply new regulations to all products.
Officials will initially focus on setting price controls for food, personal hygiene and home cleaning products, construction materials, automobile parts, medicines and health care services before moving on to other areas of the economy, she said.