Petrobras Lowers Gasoline Prices 6% as Brazil Seeks to Rein in Inflation

Petroleo Brasileiro SA (PETR4), the Brazilian state-owned oil company, said its fuel distribution unit will cut gasoline prices by 6 percent as the government battles to slow inflation from its fastest pace in more than five years.

Gasoline prices will be cut because the country’s sugar harvest will reduce costs for ethanol, which accounts for 25 percent of blended gasoline, a spokesman for BR Distribuidora, who can’t be named under company policy, said by telephone.

President Dilma Rousseff is pursuing “populist” policies to keep consumer prices in check, Adriano Pires, head of the Rio de Janeiro-based Brazilian Center for Infrastructure, a research group, said today. Annual consumer price inflation accelerated to 6.51 percent in the year through April, breaking the 6.5 percent upper limit of the target for the first time since 2005.

“The government is intervening in BR Distribuidora for the first time, and this is very serious,” Pires said in a telephone interview. “If BR Distribuidora reduces prices, other companies will be forced to reduce as well,” he said.