How The Rise In Fuel Prices Affects The Brazilian Economy

Written by Paulo Nogueira

Published on 22/06/2022 at 14:28

Frentista em posto de gasolina Petrobras – Imagem Google

Seja o primeiro a reagir!

The ICMS Charge Ceiling Is an Emergency and Temporary Measure to Contain Constant Fuel Increases

The price of gasoline at refineries increased from R$ 3.86 to R$ 4.06 per liter, recording a rise of 5.18%. Meanwhile, the price of diesel rose from R$ 4.91 to R$ 5.61 per liter, which equates to an adjustment of 14.26%. These figures were announced by Petrobras last Friday (17).

The rise in fuel prices is expected to further drive inflation, which is already at 11.73% over the past 12 months. As Brazil’s commerce logistics are heavily tied to road transportation and nearly everything consumed comes from truck freight, the increase in fuel prices will trigger a chain reaction in the prices of products.

“Brazil is a country highly dependent on road transport to supply consumption chains; any fuel price adjustment directly impacts freight costs, affecting product prices,” says Richard Clayton, businessman and president of Trinta Porcento.

ARTICLE CONTINUES BELOW

Pressure on Petrobras

In recent years, the state-owned company has faced harsh criticism from the President of the Republic, Jair Bolsonaro (PL). The president recently stated that the company’s profit “is something that no one can understand” and suggested the establishment of a Parliamentary Inquiry Commission (CPI) to investigate directors and board members.

Arthur Lira (PP-AL), president of the Chamber of Deputies, has demanded the immediate dismissal of the former company president, José Mauro Ferreira Coelho.

The deputy’s request was fulfilled: the state-owned company announced the dismissal of then-president José Mauro on the 20th. “The appointment of an interim president will now be examined by Petrobras’s Board of Directors,” the company said in a statement. The former president is the third in charge of the company during the “Bolsonaro Era.”

Price Increases

According to the Brazilian Institute of Economics of the Getulio Vargas Foundation (FGV Ibre), the rise in fuel prices will have an impact of 0.14 percentage points on the Consumer Price Index (IPCA), to be diluted in June and July.

The IPCA is an index that serves to measure price variations of a basket of goods and services consumed by the country’s population, indicating month-to-month changes.

“In this month’s IPCA, only half of this increase should be priced in. This year’s inflation, in my estimation, will be 9.2%, already considering the effects of this fuel price adjustment”, noted André Braz, coordinator of the institution’s price indices.

To Consumers

According to analyses by Petrobras, the consumer price of gasoline could rise, on average, from R$ 2.81 to R$ 2.96 for each liter sold at the pump — a variation of R$ 0.15 per liter. In the case of diesel, the state-owned company’s share could increase from R$ 4.42 to R$ 5.05 for each liter sold at fuel stations, with an increase of at least R$ 0.63 per liter.

Although the increase is imminent, the determination of a “charge ceiling” of 17% on the ICMS for fuels, already approved by the Chamber of Deputies, could alleviate prices by up to 9%, according to specialists.

“The ICMS charge ceiling is an emergency and temporary measure to contain constant fuel increases. The government is seeking a way to ensure price stability for fuel, and for that, it is determining the ICMS ceiling. However, this ceiling is not enough to cover state revenues,” analyzes Richard.

For the businessman, the consecutive increases are increasingly alarming consumers. Banks and institutions consulted in a Projeções Broadcast survey estimate that the Central Bank will raise the Selic Rate (the country’s main interest rate) to 13.75% per year at the end of the monetary tightening cycle. A week ago, the estimate was 13.25%.

“Depending on the method used, the government runs the risk of significantly increasing its debts, bringing economic risks to Brazil, which, for investors, sounds bad and diminishes interest in investing in the country,” concludes Richard.

Source: Trinta Porcento

How The Rise In Fuel Prices Affects The Brazilian Economy

The ICMS Charge Ceiling Is an Emergency and Temporary Measure to Contain Constant Fuel Increases

Pressure on Petrobras

Price Increases

To Consumers

On the Greek island of Ithaca, archaeologists have found what may be a sanctuary dedicated to the legendary Odysseus, with inscriptions bearing his name and votive offerings that span from the Mycenaean to the Hellenistic era.

Scientists enter a narrow, flooded cave 500 meters deep and find giant dinosaur footprints on the ceiling measuring up to 1.25 meters, preserved in such a rare way that a new type of trace had to be created.

In Botswana, a salt flat of up to 16,000 km² that was once an African megalake spends months as an absolute white desert, but during the rainy season it transforms into a shallow sea that reappears from nowhere and can be seen from space in the middle of southern Africa.

A giant half-ton ring fell in Kenya from space, and more than a year later, scientists still do not know where it came from.

After two years of internal discussions, Paraguay has finally regulated the law that opens the country to foreign technology and service companies with tax incentives that promise to create thousands of jobs and change the economy.

Why fighter pilots never return after ejecting: the seat launches the body at 600 km/h in 1 second, compresses the spine, reduces G tolerance, and leads to medical disqualification, not punishment.

With 1,000 buses sent abroad, the Brazilian manufacturer consolidates the strength of national technology and takes on a leading role in public transportation across all of Latin America.

Scientists believed that this marsupial had disappeared 6,000 years ago, but an expedition found two living specimens in a remote forest in New Guinea with a finger that no other animal on the planet possesses.

Extreme drought lowered the level of a reservoir in Iraq and revealed an entire city that is 3,400 years old, with walls, palaces, and over 100 clay tablets from an empire that almost no one knows about.

Astronomers have found signs of a planet hidden for decades in forgotten telescope data, and if it really exists, it will be the first new world in the solar system in over 170 years.

The Brazilian Northeast is receiving the largest wave of investments in clean energy ever seen in the country, with R$ 200 billion in wind and solar, 9,000 km of transmission lines, and a promise that could change the economy of 60 million people.

Scientists have caught a star 450 light-years from Earth, only 200 years old, spewing gas and energy in bursts, and no one knows for sure what is happening with it.

How The Rise In Fuel Prices Affects The Brazilian Economy

The ICMS Charge Ceiling Is an Emergency and Temporary Measure to Contain Constant Fuel Increases

Pressure on Petrobras

Price Increases

To Consumers

On the Greek island of Ithaca, archaeologists have found what may be a sanctuary dedicated to the legendary Odysseus, with inscriptions bearing his name and votive offerings that span from the Mycenaean to the Hellenistic era.

Scientists enter a narrow, flooded cave 500 meters deep and find giant dinosaur footprints on the ceiling measuring up to 1.25 meters, preserved in such a rare way that a new type of trace had to be created.

In Botswana, a salt flat of up to 16,000 km² that was once an African megalake spends months as an absolute white desert, but during the rainy season it transforms into a shallow sea that reappears from nowhere and can be seen from space in the middle of southern Africa.

A giant half-ton ring fell in Kenya from space, and more than a year later, scientists still do not know where it came from.

After two years of internal discussions, Paraguay has finally regulated the law that opens the country to foreign technology and service companies with tax incentives that promise to create thousands of jobs and change the economy.

Why fighter pilots never return after ejecting: the seat launches the body at 600 km/h in 1 second, compresses the spine, reduces G tolerance, and leads to medical disqualification, not punishment.

With 1,000 buses sent abroad, the Brazilian manufacturer consolidates the strength of national technology and takes on a leading role in public transportation across all of Latin America.

In the 1970s, oil became a weapon of war and paralyzed the entire world, and now the same thing is happening again with Iran closing off the route for 20% of the planet’s fuel.

Weak dollar or strong real? The American currency plummets for the third day, approaching R$ 5 and surprising the market with global inflation and tensions in the Middle East that continue to create global uncertainty.

When oil prices rise, the gas station increases prices the next day, but when it drops by 13% at once, no one explains why gasoline remains at the same price for months.

China’s investments in Brazil in factories, energy, oil, electric cars, and new industrial projects double to $4.2 billion, making the country the 3rd largest global destination for Chinese capital.

The largest fuel distributor in Brazil has just been forced to import diesel and gasoline on its own after Petrobras reduced its monthly deliveries.

Scientists believed that this marsupial had disappeared 6,000 years ago, but an expedition found two living specimens in a remote forest in New Guinea with a finger that no other animal on the planet possesses.

Extreme drought lowered the level of a reservoir in Iraq and revealed an entire city that is 3,400 years old, with walls, palaces, and over 100 clay tablets from an empire that almost no one knows about.

Astronomers have found signs of a planet hidden for decades in forgotten telescope data, and if it really exists, it will be the first new world in the solar system in over 170 years.

The Brazilian Northeast is receiving the largest wave of investments in clean energy ever seen in the country, with R$ 200 billion in wind and solar, 9,000 km of transmission lines, and a promise that could change the economy of 60 million people.

Scientists have caught a star 450 light-years from Earth, only 200 years old, spewing gas and energy in bursts, and no one knows for sure what is happening with it.