UPDATE: Venezuela To Freeze Prices Of 18 Consumer Goods

Venezuelan authorities on Tuesday said they will freeze prices on 18 consumer products as the government formally launched a new cost-regulating measure that is expected to control prices across economic sectors.

The legislation, dubbed the Law of Fair Costs and Prices, will begin with freezing the prices of products in the food and personal hygiene categories, Vice President Elias Jaua said, speaking on state television.

Among the items named were soap, detergents, paper towels, toilet paper, diapers, bleach and other household cleaners. Companies that stand to be audited include local units of multinationals like Colgate-Palmolive Co. (CL), PepsiCo Inc. (PEP), H.J. Heinz Co. (HNZ), Coca-Cola (KO), Johnson & Johnson (JNJ), Unilever PLC (UN, UL) and Nestle (NSRGY, NESN.VX), as well as local food distributor and packager Alimentos Polar.

The price regulations, announced over the summer, are socialist President Hugo Chavez's latest move to end what he has called capitalist speculators looking to create imbalances in the Venezuelan economy and destabilize his government.

Chavez, who plans to bid for another six-year term in next year's presidential elections, often accuses private companies of hoarding goods and causing shortages, which contribute to the country's chronic high inflation problems. Consumer prices rose by nearly 27% in the 12-month period ending in October, according to the Central Bank of Venezuela.

The law is "to protect our people from speculation, inflation and the high cost of living," Chavez said Tuesday via his Twitter account, applauding the launching of the measure.

Critics, however, say that the economic imbalances in the South American country result from the president's statist policies and expropriations of scores of companies which has prevented growth of domestic food production and manufacturing. Venezuela imports more than two-thirds of the food that it consumes.

The prices on the 18 household goods categories will stay frozen until Dec. 15, Jaua said, during with government committees will audit companies' cost structures to make sure prices are "fair."

"The only ones that have to fear this law are speculators," Jaua said.

The committees are expected to establish maximum retail prices for the goods soon.

Ricardo Menendez, minister of science, technology and industry, said Nov. 8 that a second phase of the law will begin Jan. 15 with a government analysis of companies in the medicine and health care sectors.

-By Kejal Vyas, Dow Jones Newswires; 58-414-249-6821; kejal.vyas@dowjones.com

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