THE NATIONAL - Friday, February 5, 2010
Markets and Consumer / 3
TRADE Markets and Consumer inflation between March 2003 and December 2009 reached 277%
In seven years of price controls are buying less and paying more
propose a new system for the gradual increase in basic food
Katie Hernandez
After seven years of price controls, which includes a list of foodstuffs, household cleaning and personal care, consumers evaluate the measure and not very efficient to reduce the cost of products. Ana Rivas, who works in a bank and despite having a salary above the minimum established in 967.5 Bs per month, says his income does not cover all basic needs for food. "I buy less food and paying more for them, it's amazing how every month up the products." The measure approved by the Government on February 6, 2003 and published in Official Gazette on 11 this month, stated the objective to control inflation. The economist Abelardo Daza recalled that at the beginning of its implementation, regulation succeeded in stabilizing prices, but not applied a system that would sincerely production costs and the amount of retail products, has become a perverse system the economy. In his view, the result after seven years is in sight: a decline in production less variety of foods on the shelves and high prices. "It created an illusion that would lower inflation control and access to cheaper food to low-income classes. But after year we see quite the contrary, Venezuela has the highest inflation in the region," . One conclusion that Jeferson Tovar, a shoe salesman in downtown Caracas, he suffers every day when you have to go to a supermarket. "Nobody meets price controls, that does not exist. There is no way to prevent winemakers rise in food prices." In most popular areas of Caracas, the government has tried to put holds social and Mercal and Pdval, which sell between 40% and 50% below the controlled prices. Although the penetration of these programs is high, do not offer all the products needed by the population. At the end of the day, consumers in the districts have to go to the corner bodega, where a kilo of meat pay between 28 and 30 Bs, although it is regulated in 17.60 Bs. A bag of rice in the Official Gazette bolivar was fixed at 2.82, sold at these facilities up to 4 Bs. "Products that are not available in the supermarkets are sold on the street or in independent stores twice its price. The solution is to create a flexible pricing system that allows gradual adjustment of foods based on production costs, "says the economist Daza. Income devalued. This year the Government offered a minimum wage hike in the first part of 10% from March. However, the devaluation of the exchange rate generated 64% loss in power of wages. Carmen Díaz, a housewife, believes it is unrealistic to think that with a small increase can offset the price increase. "There are shortages of food, and found cost twice. Money is tight to buy everything you need, "he says. The economist José Guerra said that between March 2003 and December last year, overall inflation is 277%." Checks price destroys the ability of production companies and it is inevitable that a shortage. It is essential to go to another system, you can not remove control of a single blow, but if you make it more flexible. "Suggests that you define a list of at least 20 commodities that are subject to regulation and can vary according to market , and release the rest. Luis Vicente Leon, director of Datanalisis, adding that this year the threat of expropriation of businesses can generate problems in the supply chain, which will be reflected in supply. "Although we have no shortage index as high as in 2008, the trend of recent months has been toward increasing shortage of key products such as rice, coffee, milk and sugar, "he said.
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