Brazil's fuel exception: no price rises, thanks to tax cuts

0 Comments | AFP, June, 2008

SAO PAULO (AFP) — While other countries are hiking prices at the pump, Brazil is going against the trend: maintaining retail prices by cutting fuel taxes.

The strategy, meant to offset the record high cost of oil, is also helped by the rise of the Brazilian real against the dollar -- it has more than doubled its relative value in the past five years.

The government fears that high fuel prices would make farm production and transport more expensive for one of the world's biggest agricultural exporters, explained Renato Maluf, president of the Brazilian Food Security Council.

"The strengthening of the real and the stability of diesel have averted a bigger impact on Brazil," he said.

At the refinery stage, on April 30 the government raised oil prices 10...