Venezuela froze prices on 18 key products as the Ley de Costos y Precios Justos (Law of Fair Costs and Prices) went into effect yesterday. The law was promoted by President Hugo Chávez as a necessary measure to “defend” the economy and curb the inflation rate, which was 26.9 percent last month and the highest figure in Latin America.
Some of the items with newly frozen prices are basic commodities such as toothpaste, diapers and soap. Vice President Elías Jaua said that several multinational firms such as Coca-Cola, GlaxoSmithKline and Unilever would have to reveal their production costs in order for the government to set prices accordingly. In a speech yesterday in Caracas, Chávez said, “This is a law to protect the people from capitalism.”
A conglomerate of Venezuelan chambers of commerce, known as Fedecámaras, has pledged to challenge the law in court. The president of Fedecámaras, Jorge Botti, said this law is “a quite obvious path to a centralized, planned economy.”