REFILE-Chavez ratings up, food woes dent socialist message

(Refiles to fix date in dateline)

* Ratings upside limited by scandal over wasted food

* Chavez extends marathon TV appearances

* Government says economy on the mend, analysts doubtful

By Frank Jack Daniel

CARACAS, June 23 (Reuters) - Venezuela's President Hugo Chavez has pulled his ratings up from a six-year low by blaming capitalism for a recession, although the economy and a scandal over rotting food threaten him before legislative elections in September.

Chavez started his 11th year in office on poor form, with the OPEC member sinking deeper into recession as its Latin American neighbors recover, a situation made worse by power shortages blamed on bad planning in the nationalized energy.

Venezuela's 30 percent inflation remains the region's highest, exacerbated by the rapid depreciation of the bolivar currency in the first five months of the year.

And now he must deal with rising anger after the discovery of thousands of tonnes of rotting food in government warehouses -- a sensitive topic for Chavez who blames sporadic shortages of products such as milk and sugar on private business hoarding to distort prices.

But ratings for the 55-year-old anti-U.S. leader are up to near 50 percent, from lows closer to 40 percent in February, in part thanks to a strategy of blaming the country's elite classes, and capitalism itself for the economy.

"Capitalism is speculative. All this inflation is the product of savage capitalism that we have to keep pulverizing," Chavez said on Friday, at the launch of a chain of supermarkets he recently bought from France's Casino (CASP.PA). Food prices have risen 41 percent in the last 12 months. [ID:nN16174036].

The former tank soldier is ramming home the message of an "economic war" in lengthy TV and radio addresses forcibly broadcast on all Venezuelan channels -- a method that has traditionally helped him boost ratings ahead of elections.

"His strategy saturates but it is effective," said Oscar Schemel of polling firm Hinterlaces. "By dominating with words, he dominates perceptions."

Earlier this month, Chavez lifted electricity rationing -- meaning an end is in sight to hours-long outages.

He has a large campaign warchest and has also for now strengthened the bolivar currency on a new market [ID:nVENEZUELA]. Venezuela's debt prices are up and CDS spreads, a measure of perceived risk, are tighter.

A MOVE ON BEER?

But polls in June show his ratings have stopped rising or fallen back a little and analysts say threats to nationalize the country's favorite beer maker Polar are proving unpopular.

"As the revolution advances, everyone realizes he has the productive sectors in his hands," said Leon. "He may start to be seen as the only person responsible for the problems."

Chavez now has to tackle the scandal over tens of thousands of tonnes of food left to rot by a state-run importer and manage a shrinking economy, which analysts say will not grow until 2011, despite official forecasts of a recovery within a few months.

The scandal over the out-of-date meat and milk found festering in shipping containers and the electricity crisis has raised questions about Chavez's strategy of putting more economic sectors including food under state supervision. [ID:nN16174036]

Chavez founded state-run food importer PDVAL in 2008 after shortages of products such as milk and chicken contributed to his first electoral defeat.

In recent months there have again been shortages of milk and other products he blames on the private sector, making the rotten food scandal all the more damaging.

'TWO CHAVEZ'S'

The Sept. 26 legislative elections are a barometer of support ahead of a presidential election in 2012 where the socialist leader hopes to win a third six year term.

Polls show he may not win the majority of votes in September but rules favoring large parties and a rural bias to the electoral map mean his party is likely to win most seats.

The president, whose humble roots and social projects have made him a hero for many Venezuelans, is still the country's most popular politician although his ratings have slowly declined from a 2007 peak.

Chavez has chosen a radical path ahead of the elections, including putting pressure on opposition TV station Globovision.

While this approach may serve to get out his vote in September by galvanizing his supporters, it also risks alienating swing voters. Critics call him a dictator planning to create a Cuban-style communist system.

This month, Chavez put the central bank in charge of a foreign exchange market in the latest move to fence in the financial sector that put many brokerages out of business. Economists say over-regulation is killing growth.

"Private investment has been on a non-stop decline. Given the very challenging business environment, we think the economy is going to keep contracting," said Boris Segura of RBS Securities, who predicted a sharper drop in the second quarter of the year after a 5.8 percent contraction in Q1.

Datanalisis says Chavez's popularity rose in recent months from a low of 42 percent on February but has hit a plateau of about 48 percent, with his communication strategy tempered by concerns over his attacks on the private sector.

"It is a battle between two Chavez's," said Leon. "The pragmatic Chavez, with money, who says he can resolve the problems of the country...and on the other hand the Chavez of inflation and production problems."

Hinterlaces, which tends to place Chavez's support lower, said he hit 44 percent in May, but slid four points in June. Pro-government pollster GIS XXI gave him 58 percent in May.

(Editing by Brian Winter and Frances Kerry)