Argentine price control policies reach the gasoline pump

BUENOS AIRES, April 10 Wed Apr 10, 2013 12:16pm EDT

BUENOS AIRES, April 10 (Reuters) - Argentina will cap gasoline prices for a six-month period expiring just before congressional elections, the official gazette announced on Wednesday, as the government struggles to contain double-digit inflation.

The cap will apply to higher priced liquid fuels. While helping premium gasoline customers and other users of high-end liquid fuel, the cap is bad for energy companies whose costs are zooming along with one of the worlds highest inflation rates.

The liquid fuels price freeze came after a similar move to halt supermarket price rises and an announcement on Tuesday that state-controlled energy company YPF would increase fuel imports this year due to a recent fire in the companys La Plata refinery that reduced output.

YPF shares were down 3.6 percent in early afternoon trade at 116.5 pesos per share.

The Argentine government struck a deal late last month with top retailers to extend a freeze on prices for another two months. The price accords first went into effect for 60 days in early February, after the government reported January inflation at a nearly three-year high.

Private economists expect annual inflation to hit 30 percent by the end of this year. Tight finances have meanwhile led the government to pursue heavy-handed policies including a virtual ban on foreign currency purchases that has angered middle-class voters and rankled investors.

Despite President Cristina Fernandez's wobbly popularity, caused in part by inflation and policies that have dented investment appetite, the opposition's persistent weakness could help allied lawmakers strengthen their grip on Congress in October's mid-term elections. (Reporting by Walter Bianchi and Hugh Bronstein; Editing by Chris Reese)

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