Argentine supermarkets agree to hold prices

BUENOS AIRES, July 23 (Reuters) - The Argentine government reached an agreement on Monday with major supermarket chains to continue a freeze on prices for all products until the end of the year unless providers begin charging them more.

The deal is key to the government's official goal to reach one-digit inflation this year.

Consumer prices rose 3.9 percent in the first half of the year, after a year-long rise of 9.8 percent in 2006, but many economists have stopped trusting government figures after key people were replaced at the statistics bureau.

"We've reached an agreement on price behavior for the rest of the months of this year, with an aim of preserving stability," Economy Minister Miguel Peirano said at a news conference.

Peirano was named economy minister last week after his predecessor Felisa Miceli stepped down, facing an investigation over a bag of some $60,000 in cash found in her office.

Fighting inflation became a priority for President Nestor Kirchner after prices rose 12.3 percent in 2005.

The Argentine economy is in its fifth straight year of growing by more than 8 percent, and the economic boom has stimulated spending by consumers and industry.

Peirano said the government sought "price accords that evidently allow us to limit the impact of such high demand while the supply expands."

Domestic Trade Secretary Guillermo Moreno, who is in charge of implementing price agreements with different Argentine producers, said that price accords would be renewed with other sectors, as well as supermarkets.

The government has reached price accords with producers of beef, medicine, vehicles and many other products, and also subsidizes wheat producers to keep bread prices down.

Moreno said the accords do not imply price freezes, since supermarkets will be able to raise prices if providers raise theirs, if they get approval from the ministry.

((Reporting by Lucas Bergman, editing by Gary Hill; buenosaires.newsroom@reuters.com, Reuters Messaging: lucas.bergman.reuters.com@reuters.net; +54 11 4318-0654))

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