After the brief recovery, a new price control raises the specter of shortages in Venezuela

The specter of scarcity has reawakened in Venezuela after the government announced the return of price controls on over 40 products mass consumption, a policy which has led to widespread shortages in the past and which seeks, as before, to combat inflation and speculation.

Faced with an “alteration of price dynamics”, the Executive came out – through its trade regulatory body – with a publication on social networks in which it established how much they should sell flour, sugar, rice and other products. The message kicked up a powder keg and, minutes later, was deleted.

After that threat, the pro-government deputy Jesús Faría, president of the Parliament’s Economy and Finance Commission, confirmed that the Executive had adopted “a series of decisions to establish maximum retail prices for more than 40 products”. without specifying which elements will be within this control or when the measure takes effect.

According to economist Litsay Guerrero, a researcher at the Center for the Dissemination of Economic Knowledge (Cedice), the government is trying to improve the population’s perception of its handling of price increases, which in November reached 21.9%, according to independent estimates.

With this announcement, the so-called Bolivarian revolution is trying to send out “the signal that it wants to take actions that allow these problems to be solved. The point is that this is not the way to solve them (…) it is a problem that will not be solved by the fact that prices will be controlled again,” he told EFE.

a sleeping monster

While price controls have “unenforced” in recent years, they continue to exist, as “there has not been a repeal” of the laws implementing this policy, including the Agreed Price Law, created in 2017, Guerrero recalled.

“What we have is that sleeping monster who -at any moment- can wake up. So far, it seems to loom, even if there is nothing concrete, and what it generates, of course, is uncertainty,” he said.

This unease is directly related to the history of the controls that Chavismo has implemented since 2003 and which have tightened in the last decade, when the government has set the price of numerous essential products and services, many of which are no longer available to consumers.

As a result of these policies, the most basic food, medicine and personal hygiene items they were scarce in storesin whose surroundings hundreds of people woke up every day in line hoping to buy something.

These scenarios have become commonplace and have intensified with massive inspections and arrests of business owners, especially between 2015 and 2018.

price increase

The return of control occurs in the midst of a price escalation, associated with the upside the value of the dollar, which increased by 42% in the first 20 days of Decemberwhich has a direct impact on goods and services, mostly calculated in US currency.

Only between 9 and 16 December did the price of a kilo of meat go from 78 bolivars to 117 bolivars in a shop in Caracas, which represents a 50% increase.

The shop manager, Grecia Reinoso, told EFE that it is not feasible to charge the same price to all businesses, which have different suppliers and handle different quantities of goods, depending on the size of the establishment, which causes their costs.

Price controls “can create shortages. There will be products that, at least for us, small businesses, we will stop selling“added the 27-year-old woman who, like all Venezuelans, still does not know when this measure will see the go-ahead.

EFE Agency

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