Brazil fuel price hike to trigger inflation revision, says central bank chief
2023.08.15 13:21
© Reuters. FILE PHOTO: Brazil’s central bank Governor Roberto Campos Neto reacts during a session of the Brazilian Senate in Brasilia, Brazil February 15, 2023. REUTERS/Adriano Machado/File Photo
BRASILIA (Reuters) – Brazil will likely need to upwardly revise its inflation estimates, central bank Governor Roberto Campos Neto said on Tuesday after state-run oil giant Petrobras announced a fuel price hike earlier in the day.
According to Campos Neto, who was speaking at an event hosted by lawmakers, the move’s impact on inflation is expected to amount to around 0.4 percentage points between August and September.
Petrobras said it will raise average gasoline prices by 16.3% to 2.93 reais ($0.5893) per liter beginning Wednesday, while diesel prices will be increased by 25.8% to 3.80 reais per liter.
The central bank chief stressed that while the result of higher diesel prices was indirect, more expensive gasoline reflects directly on the benchmark IPCA inflation index.
On the other hand, he added that services inflation – which the central bank has been closely monitoring – has started to fall, “and it’s important that it does.”
The bank embarked on an easing cycle earlier this month by cutting its benchmark interest rate to 13.25% after holding it steady for nearly a year to battle inflation.
In its policy statement, the central bank estimated inflation at 4.9% this year and 3.4% in 2024, in both cases above the official targets of 3.25% and 3%, respectively.
