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Venezuela will put its cost regulations on a series of selected food, household goods and personal care products into effect March 1, Vice President Elias Jaua said Friday.

As part of its Law of Fair Prices and Costs, Venezuela's leftist government in recent months began an evaluation of companies' cost structures to determine "just," state-set prices for their products. The initiative, launched by President Hugo Chavez, is partly an effort to control one of the world's highest inflation rates and aims to set prices for goods across economic sectors as well as establish "reasonable" profits for the companies that produce them.

The government began in November by freezing the prices of 19 items, mostly personal-hygiene and household-cleaning products, but has delayed the release of the new government-mandated prices.

Chavez has warned that companies failing to comply with the regulations may have property expropriated.

On Friday, Jaua said companies will be notified of the price caps soon and will have the ability to appeal against them.

"We haven't altered the value of the recognized costs that [the companies] presented to us," Jaua said, according to state news agency AVN. Instead, the government will no longer allow companies to factor items like income tax into how much they eventually charge for their products, said Jaua.

Companies that face audits include local units of multinationals like Colgate-Palmolive Co. (CL), PepsiCo Inc. (PEP), H.J. Heinz Co. (HNZ), Johnson & Johnson (JNJ), Unilever PLC (UL, ULVR.LN) and Nestle SA (NSRGY, NESN.VX), as well as local food distributor and packager Alimentos Polar.

Chavez, who is seeking re-election this October, has said rampant speculation in the private sector is responsible for the country's notoriously high inflation, which stood at an annualized rate of 26% in January.

On Thursday, Chavez gave a preview of some of the new state-set prices, announcing a 50% cut in the price of a Coca-Cola Femsa SAB (KOF, KOF.MX) brand five-liter package of bottled water and a 24% cut in the price of a deodorant marketed by Procter & Gamble Co. (PG).

-By Kejal Vyas and Ezequiel Minaya, Dow Jones Newswires; 58-414-249-6821; kejal.vyas@dowjones.com

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