Higher prices irk Venezuelans ahead of Chávez's referendum

Desiree Pereira couldn't decide among the squash she was squeezing at a food stall here on Tuesday.

Ms. Pereira expressed no uncertainty, however, when asked about the Venezuelan economy under President Hugo Chávez.

"Prices are always going up, and salaries can't keep up," said Pereira, a computer programmer. "It's time to give someone else a chance."

Inflation of 31 percent – easily the highest in Latin America – and continuing food shortages are presenting major problems for Mr. Chávez as he asks Venezuelans on Feb. 15 to lift term limits so he can run for reelection indefinitely. Food prices alone rose by nearly 50 percent in 2008. Government price controls kept down energy costs and electric and telephone rates.

Chávez is making a determined defense of his 10 years in office as he campaigns across Venezuela, noting that he inherited an economy in recession in 1999 and has overseen an economic boom. During his tenure, the percentage of Venezuelans living in extreme poverty – those who subsist on $1 a day or less – has been halved, government statistics show.

In an economy that's increasingly dependent on oil revenues, Chávez has used the windfall from record-high oil prices to spend billions of dollars to offer free schooling and healthcare and to sell food to the poor at below-market prices.

The number of retirees receiving pensions also has risen sharply, from about 387,000 in 1998 to nearly 1.3 million in 2008, according to the government.

These subsidies – now imperiled by the collapse in oil prices – have made him a slight favorite to win the upcoming referendum.

"The situation here is good, thanks to Comandante Chávez," said real estate broker John Fernandez as he bought a couple of pounds of shrimp and squid Tuesday at the Quinta Crespo public market. "Thanks to him, the poor eat three times a day. I hope he stays in power a long time."

If Chávez wins the Feb. 15 referendum, he'd seek reelection in 2012 to another six-year term.

While polls show that rampant crime is the public's biggest concern, inflation and the country's economic problems rank high, said Oscar Schemel, a Caracas-based pollster.

Analysts think that Chávez has called the referendum now because Venezuela's economy is slowing rapidly. Venezuela grew by 8.5 percent in 2007 but by 4.9 percent in 2008. Caracas-based economic analyst Pedro Palma is forecasting negative growth of 1.5 percent in 2009 and overall inflation of 45 percent.

Business owners were apoplectic after Chávez decreed on Sunday that all establishments had to close on Monday to celebrate his 10th anniversary in power.

Chávez has attempted to fight food inflation by having government officials require that meat, chicken, milk, and dozens of other products be sold at artificially low prices. Government agencies also sell food at below-market prices in poor neighborhoods.

The measures have had some success, said Ylva Mora, who heads a Caracas-based nonprofit that tracks inflation.

"But the poor feel the price hikes when they can't buy the subsidized food," Mora said, adding that while 15.6 million Venezuelans bought subsidized food in 2005, only 9.9 million did in 2008.