Negative inflation for the second straight month in August? Economists warn of possible “stagnation” after Petrobras lowers gasoline and diesel prices

The monthly preview of the Extended National Consumer Price Index-15 (IPCA-15) in relation to the month of August estimates that inflation will turn negative again, dropping 0,73% and making the accumulated result for the last 12 months below two digits. Although this event represents a change in consumer prices, in theory, it may indicate, however, a possible stagnation of the economy. 

Inflation had already turned negative during the month of July, falling 0,68% and being one of the lowest values ​​reached since 1998, even before the PT government managed the country. According to experts, despite deflation already being a reality (IPCA negative), consumers continue to pay high prices for basic items such as Long Life Milk, which rose more than 80% in just one year. Despite the increase in food prices, after the rise in fuel prices that directly impacted freight, and the high dollar, which made many farmers prefer to export to receive through foreign currency, the Petrobras announced a brief reduction in gasoline and diesel prices to control domestic domestic prices.

However, this has not been enough for the transport and logistics sector, with accumulated inflation of 10% which was not passed on to final consumers, drastically damaging the annual profit of private institutions. 

In Santa Catarina (SC), after reductions in fuel prices, gasoline is being counted at around BRL 4,99, mainly in some coastal cities and Midwest. However, in Paraná (PR), a neighboring state, there are gas stations charging almost R$6, a difference of R$1 from one state to another. Analysts claim that this price difference is mainly due to the ICMS taxes required by the states, which differ in percentage. 

International fear, insecurity, high inflation… what has been impacting the economy in Brazil? 

In the year 2022, the economy in Brazil has been affected by a series of factors that have a direct impact on inflation, such as the high dollar (R$ 5,11 in the last trading session) and the increase in the Selic rate, which is in double digits and makes investors prefer to withdraw the money invested in the stock exchange to invest in the Treasury Direct, reducing a part of the investments in companies and causing the stagnation of retail growth: giants like Magazine Luiza and Americanas are proof of this, since they have fallen by more than half the price since the beginning of the pandemic. 

The increase in commodity prices, products that are the focus of the Brazilian economy, also increased internal inflation, as agribusiness preferred to export, despite record harvests, resulting in a decrease in internal stocks and price increases due to the law of supply and demand. During 2020, with the onset of the pandemic, rice cost more than BRL 35 in some markets and meat practically tripled in price in the South region. 

Elections in 2022 intensify investor fears and could shape Petrobras' attitudes

The elections, scheduled to take place during the month of October 2022, intensify investors' fear due to the polarity found between the candidates in focus in voting intentions: Luiz Inácio Lula da Silva, elected as president of Brazil for two years in a row, and Jair Bolsonaro, current President of the Republic.

The results obtained this year could determine the course of Petrobras' pricing policies between October and December, including a new shot in the prices of gasoline and diesel, impacting the transport and logistics sector.