Brazil may use imports to curb inflation, Mantega tells Valor

Wed Feb 27, 2013 6:30am EST

Related Topics

* Finance Minister Mantega "monitoring" price trends

* Sees evidence of aggressive mark-up in local prices

* Tells Valor "adjustments" may be announced soon

SAO PAULO, Feb 27 (Reuters) - Brazil's government may slash import taxes in industries where local manufacturers are raising prices aggressively, to try to head off accelerating inflation, Finance Minister Guido Mantega told newspaper Valor Econômico on Wednesday.

Mantega, who spoke to Valor in New York on the sidelines of an event, told the newspaper that the government was monitoring markets where manufacturers marked up prices "exaggeratedly" and with no apparent justification. He did not name those sectors or give further details on potential policy actions.

Reuters could not reach spokespeople for the Brasilia-based finance minister to confirm Mantega's comments to Valor.

Last year, the government raised import taxes for more than 100 items, most of them manufactured goods, to protect the local industry from cheap imports.

"Now I am warning that we are monitoring the situation and that we could lower some tariffs," Mantega told the newspaper. "There are people going too far. In coming days, we might implement the necessary adjustments."

The minister's remarks underscore the government's preoccupation with inflation, which is climbing at its fastest pace in a year. But at the same time, his comments signal that policy implementation could remain volatile as President Dilma Rousseff's administration struggles to reignite growth in an ailing economy and spur investment while still keeping a lid on inflation.

In recent weeks, steelmakers have announced a series of price hikes for some products, such as rolled steel, plates and slabs. Paper and carton producers as well as petrochemical companies have also ramped up prices for wholesalers to restore margins.

The government's focus on inflation "is of a permanent nature," Mantega said, and policymakers are not relaxing their oversight while the economy fails to grow at satisfactory rates.

He said some inflation measures indicated a "less pressing outlook" for prices and that the economy was showing signs of a recovery.

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