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BUENOS AIRES, Argentina (AP) — Argentina's congress on Thursday approved a law that lets the government intervene in setting prices and profits in an attempt to tackle one of the hemisphere's worst inflation rates.
Economy Minister Axel Kicillof said the measure, approved earlier by the Senate, would defend consumers against "the innumerable abuses we suffer every day on the part of concentrated groups with monopoly power."
But local business leaders said the law is likely to aggravate shortages and inflation by discouraging people from selling price-controlled goods or making investments.
The law gives the state power to set maximum and minimum prices as well as control profit margins. Companies that set prices considered "artificial or unjustified" can be fined. However, the government bowed to earlier complaints by exempting most small and medium companies.
The lawmakers also created a government agency to monitor prices and a legal system to resolve consumer complaints.
Pro-government congresswoman Diana Conti said the laws give the government "instruments to defend users and consumers in a better way."
Conservative opposition lawmaker Pablo Tonelli argued that the government has been unable to resolve problems such as inflation and investment, "so now it is applying the only method it knows: intimidation."
Business groups said before the vote that past experience in Argentina and elsewhere shows that such laws lead to shortages of goods and services and the loss of jobs.
President Cristina Fernandez's administration has accused farm producers of holding back most of their soy harvest in hopes that a new devaluation might increase profits. The peso has been slumping against the U.S. dollar and hit its lowest level ever on the black market this week.
Confidence is dwindling in Argentina's frail economy, which is in recession as it struggles with falling foreign reserves and soaring prices. Officials acknowledge inflation of 18.2 percent through the first eight months of the year, while private analysts say it may be running at 40 percent.
Argentines are haunted by memories of the 2001 economic crisis, when banks froze deposits and the currency lost value, so people are eager to obtain and hold dollars as a safety net. But government restrictions on exchanging pesos for dollars have backfired by pushing many people to buy greenbacks on the black market, driving down the peso's value.
Fernandez slammed American Airlines on Thursday, calling it a "vulture with turbines," after the company's decided to limit the sale of tickets up to 90 days. She accused the airline of being part of a plan to destabilize the country along with U.S. creditors seeking payment of some $1.5 billion In debt.
American Airlines has not announced the reason behind its decision, but Argentine media have said it was tied to the government's tough currency controls.