Mérida, February 29th 2012 (Venezuelanalysis.com) – In order to provide “fairer” prices to consumers and to combat inflation, the Venezuelan government has set maximum selling, wholesale, and production prices on a range of basic bathroom, cleaning, and drink products. The new prices come under the law of fair costs and prices, passed in July last year.
The price limits apply to nineteen basic product types, the specific prices of which will vary according to 204 versions of those products, that is, according to the number of units per packet or number of mils or grams.
For example, a package of 48 medium sized nappies are currently being sold, according to the National Superintendency of Costs and Prices (Sundecop), at an average price of Bs 123. Sundecop’s consumer price limit is Bs 95.20, a reduction of 23%.
The price of clothing softener, 1 litre, would go down from an average Bs 25.70 to Bs 24.50, a reduction of 5%, while 400mls of shampoo would go down from an average price of Bs 42.83 to Bs 32.38, a 25% reduction.
Other products, their prices reduced by between 4% and 25%, include, pasteurised fruit juice, toilet paper, soap, detergent, deodorant, toothpaste, baby food, floor polish, mineral water, razor blades, and sanitary napkins.
New prices will come into effect as of 1 April, giving companies time to explain the higher prices they charge, to appeal the maximum prices, as well as to make the adjustments and stamp the new prices on the products.
In setting the prices, Sundecop took profit margins, transporting, and marketing costs into account. Sundecop also said it analysed the products’ measurements or size, packaging, production cost, research, administration personal, and average selling price, among other aspects.
It didn’t include shop promotional discounts, income tax, or exchange rate losses when importing primary materials.
Karlin Granadillo, superintendent of Sundecop, said the costs study was based on information supplied by 15,000 companies and explained that “[the prices of ] personal hygiene products have been behaving strangely, increasing every month without any kind of reason”.
All of the new maximum prices are available in the country’s legal document, Official Gazette 391,614, printed on Monday. Price tables include the maximum sale price to producer or importer, maximum wholesale price, and the maximum price the product can be sold to the public, for all of the different sizes of products.
330mls of mineral water, for example, has a maximum price of Bs 2.15, Bs 3.22, and Bs 3.69, according to the three production-sale stages. Five litres of mineral water are priced at Bs 13,65, Bs 16, 63, and Bs 17,89 according to the three stages.
Likewise, for nappies, there are 15 different price sets for small nappies, according to the number of nappies in each packet, and 15 again for medium, large, extra large, and extra extra large nappies.
As declared in the gazette, the new prices must be marked in some way, in indelible ink in a visible place on the product. Any new product versions that come out- such as those containing an amount of unit numbers not specified in the pricing list- must first be approved by Sudecop.
Those companies who do not apply the new pricing from 1 April, or who contribute to scarcity (by not producing, not selling, etc) will be fined in accordance with the Law of Fair Costs and Prices.
President Hugo Chavez has also said that his government would consider nationalising companies which don’t comply.
Law of Fair Costs and Prices
The Law of Fair Costs and Prices was passed with the aim of a more just pricing structure for consumers, as many prices are “disproportional” to production and distribution costs. Vice-president Elias Jaua also pointed out that many companies have been including the income tax into the price, which was something “the companies [not consumers] should be paying”.
Granadillo countered some comments made by the opposition and private press, saying, “It’s not true that companies are [selling at prices] below production costs, so there shouldn’t be any scarcity, and when there is, it’s a consequence of manipulation by the companies”.
While it has been impossible in Venezuela to buy powdered milk for the last year, and cooking oil has been very difficult to get outside of the black market, other hygiene products such as nappies, sanitary pads, and toilet paper have often been only available in some of the more expensive brands.
As well as a strategy to secure greater profits, hoarding and speculation are often employed as a political tactic by the business sectors to destabilise the government.