Chavez Price Caps Spark Panic Buying of Coffee, Toilet Paper

By Nathan Crooks and Jose Orozco
Bloomberg
Nov. 28, 2011

Nov. 25 (Bloomberg) -- Venezuelan President Hugo Chavez’s move to expand price controls this week sparked panic purchases by consumers, leading to shortages of everything from coffee to toilet paper.

People are buying more than they need to stock their homes and resell the products at a profit in the black market, Food Minister Carlos Osorio said yesterday on state television. The authorities are visiting stores to ensure the availability of regulated products, he said.

“I’m buying everything that’s on the price control list that’s going to be regulated,” retired schoolteacher Elena Ramirez, 56, said in an interview at a Dulcinea supermarket in Caracas where she bought 12 packages of toilet paper, each with four rolls. “Everyone is in the same game. It’s madness.”

Under regulations that took effect on Nov. 22, the government can fix the price of 15,000 goods in an attempt to slow inflation that reached 26.9 percent in October, the highest in the Western Hemisphere. Chavez immediately ordered a freeze on the price of 18 personal care items ranging from toothpaste to deodorant until mid-January to prevent monopolies from “ransacking the people.”

Speaking on state television today, Chavez said that he had detected “capitalists” hoarding thousands of kilograms of powdered milk, coffee and cooking oil and threatened to nationalize companies and factories caught stockpiling goods.

Chavez Leads

“I’m at the front of this operation, and we’re going to occupy factories and companies,” Chavez said. “We’re going to nationalize what needs to be nationalized. The bourgeoisie hoard milk, sugar and cooking oil and then blame me. But it’s their fault, the hoarders.”
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Under guidelines published in the Official Gazette Nov. 18, companies must register with the national price regulator and disclose information about production, distribution and commercialization costs as well as details of local and international suppliers and sources for raw materials. The regulator will then fix prices.

“The law of supply and demand is a lie,” Karlin Granadillo, the head of a price control agency set up to enforce the new regulations, said yesterday on state television. “These are not arbitrary measures. They are necessary.”

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