Petrobras raises gasoline and diesel prices starting this Wednesday
André Braz — Foto: Leo Pinheiro/Valor
The increases of 16.27% and 25.82% in gasoline and diesel prices, respectively, led some analysts to revise upward their inflation forecasts for the year. As a result, the Extended Consumer Price Index (IPCA), Brazil’s official inflation indicator, is now less likely to end the year within the inflation target range.
The Central Bank’s latest Focus bulletin, a weekly survey with analysts, showed a 4.84% projection for the IPCA for the year. This means that the projections were already close to the top of this year’s target range, which is 1.75% to 4.75%, with a midpoint of 3.25%.
Tuesday morning, the oil company announced an adjustment of 16.3% (R$ 0.41 per liter) on the price of gasoline and 25.8% (R$0.78 per liter) on the price of diesel sold to distributors, which will take effect this Wednesday.
In the calculations of economist Andrea Angelo of Warren Rena, the fuel adjustment has a total impact of 0.38 percentage points on the IPCA this year, being 0.31 pp of gasoline, 0.03 pp of diesel and 0.04 pp of ethanol.
Of that total, 0.11 pp should already appear in the August IPCA reading and the remainder in September. Thus, Warren’s forecast for the IPCA at the end of the year went to 5% from 4.6%.
XP Investimentos, on the other hand, estimates that the Petrobras announcement adds 0.30 pp to its estimate for this year’s IPCA, currently at 4.6%.
The total impact of the announcement, according to the broker’s calculations, is 0.46 percentage points. However, its year-end forecast already took into account a 6% adjustment in gasoline for distributors. “Since it was 16%, this leaves about 0.30 points of upward bias,” XP said in a note to clients.
Following the announcement, Itaú revised its August and September IPCA forecasts to 0.31% and 0.50%, respectively. For the full year, the total estimated impact was 0.25 points, bringing its forecast to 5.1% from 4.9%.
According to André Braz, an economist at Fundação Getulio Vargas (FGV), with fuel price hikes, the IPCA for August is expected to be around 0.20%; and for September, 0.40%.
Mr. Braz explained that the increases were very significant, affecting two fuels with a strong impact not only in the IPCA calculation, done by the Brazilian Institute of Geography and Statistics (IBGE), but also in FGV’s General Market Price Indices (IGPs).
Another significant impact will be on the monthly evolution of the IGPs. Mr. Braz noted that, in the case of this index, in addition to the impact of having more expensive gasoline on retail, when diesel prices rise, it influences the evolution of wholesale prices. Wholesale prices represent 60% of the total IGPs. While the IPCA measures only retail prices, the IGP covers wholesale, retail, and construction.
Mr. Braz calculates a total impact of 0.72 pp on the Wholesale Price Index (IPA), which represents the wholesale within the IGPs—0.39 pp for the IPA-DI for the full month of August, and an additional 0.39 pp for the IPA-DI of September. In the case of the more expensive gasoline, the impact on wholesale is 0.26 pp; 0.12 pp in the IPA-DI of August, and 0.12 pp in the IPA-DI of September.
“For the year, IGPs that were heading for deflation around 4% in 2023 may fall less, around 3%, due to the fuel price increases,” said Mr. Braz.
The economist issued another warning. In the expert’s opinion, further adjustments in fuel prices in the domestic market are not impossible, with new impacts over inflation projections.
However, Itaú Unibanco considers this risk to be low at the moment. “The estimated lag is close to 8%, which seems to us to be a comfortable level in the short term. Our projections for the oil price are at $85 per barrel and for the exchange rate at R$5 per dollar at the end of the year. So we don’t see much room for a residual price adjustment.”
For J.P. Morgan, Petrobras’ announcement has a total impact of 0.30 points. However, the bank also had a high of 8% of gasoline in its estimates. “Thus, half of the potential impact has already been incorporated,” the bank said in a note to clients.
For August, the IPCA estimated by J.P. Morgan went from 0.12% to 0.19% and for September, from 0.25% to 0.36%. “Nevertheless, as we have also revised down inflation for the fourth quarter, in the wake of lower air fares and food, we have maintained our forecast for the end of the year at 4.8%.”
*Por Marcelo Osakabe, Alessandra Saraiva — São Paulo, Rio de Janeiro
Source: Valor International