Reverse with the increase in fuel prices in the midst of an inflation that does not subside

The national government once again extended the update fuel taxes to avoid increases and sustain the plan that sets increases in retail prices of 3.2% per month.

The decision was made official through Decree 168/2023, published on March 31 in the Official bulletin.

Gasoline prices rise and increases continue for April

In this way they accumulate seven consecutive quarters without the tax adjustment that have an impact on the price of unleaded gasoline, virgin gasoline, and diesel.

As stated in the Decree, the adjustment is for the “third and fourth calendar quarters of the 2021 calendar year, to the first, second, third, and fourth calendar quarters of the 2022 calendar year, and to the first calendar quarter of the 2023 calendar year”.

The law that governs these increases provides that they are fixed amounts to be updated by calendar quarter based on the variations of the Consumer Price Index (CPI) provided by the INDEC.

When will the increases be applied?

The letter of the Decree justifies the measure “in order to ensure a necessary stabilization and an adequate evolution of prices” Thus, it indicates that “it is reasonable, for unleaded gasoline, virgin gasoline and diesel, to postpone until July 1, 2023 the effects of the increases in the amounts of the taxes.”

March inflation will exceed 7% and new increases announced for April

In addition, in the recitals of the measure, the decree states that “it must be taken into account that tcutting consumption taxes, and since the demand for liquid fuels is highly inelastic, the variations in taxes are transferred practically directly to the final prices of fuels”.

In a policy that seeks to align inflationary expectations at the end of 2022, the Government agreed on a path of fuel increases of 4% in the first three months of 2023 and 3.8% for April.

The application of this tax is paid by the consumer and does not affect companies but directly impacts mobility and logistics costs, an effect that the Government seeks to avoid in the midst of escalating inflation.

LR