President Nicolas Maduro. File picture: Carlos Garcia Rawlins

Caracas - Venezuela decreed on Friday a new price-control law that sets limits on company profits and establishes prison terms for those found guilty of hoarding or overcharging, part of President Nicolas Maduro’s efforts to tame inflation.

Maduro, who was elected last year to succeed the late Hugo Chavez, blames a 56.2 percent jump in consumer prices last year on an “economic war” led by political adversaries, while critics call it evidence of the failure of Venezuela’s state-driven economic model.

The Fair Price Law, which carries out many of the same functions as the almost identically named Fair Price and Cost Law of 2011, appears to unify a disparate set of controls that were first created by Chavez in 2003.

It sets a maximum profit margin of 30 percent and requires firms to obtain “fair price certificates” to access dollars through the country’s currency control mechanism.

The law carries prison sentences of up to 14 years for crimes including hoarding, “destabilising the economy” and food trafficking, which refers to people buying subsidised goods at home and reselling them mainly in neighbouring Colombia.

A price enforcement agency called the National Superintendence for Defence of Socioeconomic Rights will be charged with “determining reasonable profit margins”.

Venezuela has for years passed regulations giving state officials sweeping power over the private sector, but selective enforcement tends to make the rules less draconian than they initially appear.

Previous laws created by Chavez called for prison sentences of up to six years for hoarding or overpricing of food. Last year Maduro launched a theatrical takeover of an electronics retailer accused of overpricing its products and led inspections of thousands of businesses, promising the effort would push consumer prices down by 5 percent in November.

Prices in fact rose 4.8 percent that month.

Critics insist the nation’s real problems lie in a torrid expansion of the money supply, inefficiency of state-run firms and a sluggish currency control system that prevents businesses from acquiring imported raw materials or machinery. They also insist that expanding the cadre of state inspectors will increase the possibilities for corruption.

Maduro’s campaign against high prices has appealed even to some of his critics who agree that unscrupulous shop owners have taken unfair advantage of consumers amid the inflationary spiral. – Reuters