The WSJ reports: "Argentina has added more than 100 consumer products to a controversial price control program as the government grapples with one of the highest rates of inflation in the world.
Inflation is widely thought to be more than 30% following the devaluation of the Argentine peso in January and the government's habit of financing deficits through money printing. Instead of making unpopular spending cuts to tame inflation, President Cristina Kirchner has capped prices on almost 200 basic consumer goods and almost doubled benchmark interest rates.
The three-month-old price control program now covers 302 basic consumer products such as milk and bread sold by large supermarket chains, Commerce Secretary Augusto Costa said Monday. Prices on the 108 new items will fall about 10% on average, while price caps on the 194 products in the program since the beginning of the year rose just over 3% during the first quarter, he said.
"Adding products to the program generates substantial reductions in prices," Mr. Costa said at a news conference. "What we are agreeing with the companies is that they provide these products at a set price because at that price they are going to have a reasonable profit."
The government also said Monday that the number of price-capped products sold by provincial supermarket chains will more than double to 176 items. Wholesalers that sell to small shops will also observe price caps on 58 products, Mr. Costa said.
"In some cases, the prices are very tight. That shrinks profit margins a lot. You might even be running a loss on some products, but it's not going to put any companies at risk," said Fernando Aguirre, a spokesman for supermarket trade groups CAS and FASA, whose members have about 3,000 stores".
