During a radio interview on Thursday, former President Luiz Inácio Lula da Silva said the federal government needs to intervene to control fuel prices in order to ease inflation. “About 50 percent [of price hikes] are government-administered, which it could control but doesn’t,” he said, in a statement that could send shivers down investors’ spines.
The Brazilian presidential frontrunner has argued for a change in Petrobras’ pricing policy in order to “Brazilianize” fuel prices at the pump. Since 2016, they have been pegged to international fares.
Lula has tried to counter the (unfair) perception held by conservative sectors that he is a radical leftist, but in recent days has only fueled his opponents misgivings. Earlier this week, he argued that abortion should be legalized (a stance that doesn’t have a lot of popular support) and called for union leaders to find out where lawmakers live in order to “put an end to their peace.”
In the past, price controls have failed miserably. During the Dilma Rousseff years, as inflation began creeping into the double digits, a similar policy resulted in estimated losses of BRL 100 billion (USD 18 billion) for Petrobras.