LatinNews Daily Report - 02 December 2013

ECONOMY | Consumers hit with new fuel price increases. Brazil’s state oil company Petrobras lifted wholesale diesel and gasoline prices by 8% and 4% respectively on 1 December in order to “make prices in Brazil converge with the international benchmarks, within a compatible period, [and] assure that debt and leverage rates return within 24 months to the limits established by the 2013-2017 Business Plan”, the company’s Chief Financial Officer Almir Barbassa said on 30 November. Since June 2012 Petrobras has increased gasoline prices by 15% and diesel prices by 22% to reduce the discount with international prices. For Brazilian consumers, the latest increases, the first since March last, will amount to a 2.5%-3.0% increase at the pump, according to estimates by local analysts. On 25 October Petrobras had put a new automatic price adjustment formula to the board. However the board asked for a revised formula. The new formula has not been divulged but sector analysts saw in the latest increase the staying hand of Finance Minister Guido Mantega, who is the company’s chairman. The Brazilian government, which controls Petrobras through a majority of voting shares, has been reluctant to sanction additional price rises ahead of an election year, at a time when consumers are already feeling the inflationary pinch and economic growth is stagnant.

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