Confusion Over Setting Prices Plagues Russia : Economy: Despite reforms, old mechanisms for controlling costs at state-run shops remain in effect, with producers accused of driving up their profits 200% to 300%.

Boris N. Yeltsin’s bold plan to liberalize prices assumes that the prices for most goods in Russia will be freely set by the invisible hand of the market.

But at Dieta Store No. 40, it isn’t hard to see state fingerprints on the prices of smoked meats, cheese, butter and candy.

The confusion over how to determine prices has emerged as a central problem plaguing Russia as it struggles to transform from a centrally planned economy to a market economy.

Yeltsin, the president, has been sharply criticized for allowing prices to rise without breaking up old mechanisms for supplying and controlling prices at state-run shops. Yeltsin, in turn, blames a wide variety of officials for Russia’s new economic crisis, including store managers for refusing to show initiative in setting reasonable prices.

Store administrators were in a tizzy late last week over a spot inspection by a city official to make sure that Dieta’s pricing was within the permitted norms. They nervously clutched sheaves of wholesale price lists to show the inspector that they weren’t gouging buyers.

In the face of rising public anger over prices that have tripled or more since the reforms began Jan. 2, politicians are trying to refocus blame onto the still largely monopolistic middlemen and producers.

Yeltsin accused producers last week of driving up their profits 200% to 300%. “It is probably time to bring down the profit rates at least to the 50% level,” he warned.

Despite talk of free-market prices, retail experts say that state stores like Dieta have little flexibility in setting prices. Most prices are determined by district trade organizations, the middlemen between individual state-owned stores and suppliers.

The Dieta store--the name means “special foods” or “delicacies”--is housed in a rabbit warren of buildings and offices just off Arbat Street.

The store is permitted a defined markup of 15% to 20% on the wholesale prices it negotiates with suppliers and can get into trouble if its prices are too high, said Valentina Molokova, a store official.

“We get the prices from the supplier,” Molokova said. “If we don’t like the prices, we can send the goods away or we can talk about it. . . . What we agree on is set down in a protocol of prices.”

Viktor Yefremov, head of the Russian government’s price department, said no individual store has the right to lower prices. He said that only the district trade organizations can do that, but they rarely do so because suppliers insist that their prices cannot be altered due to production costs.

But despite such constraints, Molokova said, store administrators are getting pickier about what they will accept from suppliers and are searching for bargains.

She said they look for “the highest quality and the lowest prices,” in part because the neighborhood of 2,350 residents includes a large number of elderly people on limited incomes.

In addition, stores are increasingly returning goods because people won’t buy them at the suppliers’ price, Yefremov said. Stores in the Russian city of Vologda just returned 61 flasks of sour cream, he said.

There have been improvements in supply and variety in the two weeks since the price reforms, Molokova said.

Dieta was able to keep bacon, salami, two kinds of sausages and frankfurters stocked in its smoked-meat case, with hardly a line, because the prices discouraged all but the most affluent shoppers.