January 17, 2014 / 12:25 PM / 4 years ago

Brazil to allow fuel price rises of up to 8 percent - newspaper

SAO PAULO, Jan 17 (Reuters) - Brazil’s government will allow fuel price rises of between 4 percent and 8 percent, Folha de S. Paulo newspaper reported on Friday citing unnamed officials.

It said state-controlled oil company Petróleo Brasileiro SA will be allowed to use the range as a parameter, smoothing out the implementation of any fuel price increase. Details of the government’s fuel price policy have been kept secret since a round of meetings last November.

Folha did not give a specific time frame for the increases. Earlier this week it reported that some fuel price hikes could come in June.

According to the newspaper, there should be two price hikes per year.

Calls to the press offices of the finance ministry and Petrobras seeking comment on the Folha report were not immediately answered.

Part of the controversy involving a formula for fuel prices stems from the government’s concern over the impact of a price hike on inflation. Consumer prices are rising close to 6 percent a year, near the ceiling of the central bank’s target. Transport prices have a significant weighting in the IPCA consumer price index.

Petrobras, as the company is known, on Nov. 30 raised gasoline prices by 4 percent and diesel by 8 percent, less than the market expected. Prices for domestic gasoline are about 15 percent below world prices, while those for diesel 18 percent below, according to the estimates of several analysts.

At the time, Petrobras declined to say how future price changes would be calculated and when they would be made, insisting on secrecy to protect its commercial interests. The company is Brazil’s only refiner, and also the only fuel importer willing to take a loss on imports.

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