MELISSA BLOCK, HOST:
And now to Venezuela, where galloping inflation has put many basic goods out of the reach of average consumers. At 54 percent, Venezuela has one of the highest annual inflation rates in the world. So, the socialist government has been ordering business owners to empty their warehouses and slash prices. Shoppers are delighted but storeowners are dismayed.
John Otis reports from Caracas.
JOHN OTIS, BYLINE: Amid runaway inflation and shortages of things like milk and toilet paper, President Nicolas Maduro claims that unscrupulous capitalists are waging an economic war against his government. So, Maduro has taken some drastic measures, like this raid on a bicycle warehouse staged for television news cameras.
JAQUELINE FARIAS: (Foreign language spoken)
OTIS: Caracas City Administrator Jaqueline Farias claimed the owners were hoarding the bikes to drive up prices.
To combat inflation, Maduro has threatened to put a cap on business profits. His government has arrested dozens of business owners and forced stores accused of price gouging to discount their merchandise by 50 percent or more.
NICOLAS MADURO: (Foreign language spoken)
OTIS: Maduro, in a speech to university students, called for volunteers to serve as roving price vigilantes in shopping malls.
(SOUNDBITE OF TRAFFIC)
OTIS: As a result, throngs of shoppers are lining up outside stores that have either been forced to offer discounts or are doing so voluntarily to avoid government scrutiny.
(SOUNDBITE OF CROWD)
OTIS: At the Caracas City Market Mall, the lines can get a little unruly. But as she waits her turn to buy a computer for half price, college student Giovani Morales praises the government measures.
GIOVANI MORALES: (Foreign language spoken)
OTIS: Storeowners can't be allowed to mark up prices 1,000 percent, Morales says. They're not being asked to give things away but to charge fair prices.
Retailers admit that some price gouging is going on but they say they're being unfairly singled out. Most consumer goods in oil-rich Venezuela are imported but the government rations the sale of dollars that merchants need to make those overseas purchases. That forces them to buy dollars on the black market where the exchange rate is 10 times the official rate. To avoid selling at a loss, they jack up prices.
UNIDENTIFIED MAN: (Foreign language spoken)
OTIS: The frustration was captured in this TV news footage of a computer storeowner in the city of Puerto La Cruz, arrested for price gouging. In Caracas, merchants say they're also feeling the pressure.
DAVID BARROS: (Foreign language spoken)
OTIS: (Through Translator) In the past week, I've received more insults than in my entire life, says David Barros, who sells backpacks at the mall. They've called me a thief, a price gouger, a dog and a miserable wretch. But this is not my fault.
BARROS: (Foreign language spoken)
OTIS: Rather than profiting from the economic distortions, Barros and his business partner, Andres Simon, describe themselves as victims. Simon shows me a flimsy backpack worth about $25. But because it was purchased with black market dollars, he must charge the equivalent of about $250 to make a small profit. Not surprisingly, their sales have fallen 70 percent compared to last year.
BARROS: (Foreign language spoken)
OTIS: In the short-term, President Maduro's measures appear to have worked. Ruling party candidates won two-thirds of the mayoral posts that were up for grabs in nationwide elections on Sunday. But Simon predicts that the forced price cuts will only lead to more shortages.
To make his point, Simon leads me past the nearby Samsung and Sony stores whose shelves are bare. He says the owners were forced to liquidate at half price. Now, instead of importing more computers and TVs and selling at a loss, they've decided to shut down.
For NPR News, I'm John Otis in Caracas.