UPDATE 2-Brazil slashes food import taxes after president's popularity slides

Brazil's government will eliminate import taxes on products including sugar, coffee, corn and beef, part of a set of measures aimed at reducing food prices, Vice President Geraldo Alckmin announced on Thursday.

Brazil's government will eliminate import taxes on products including sugar, coffee, corn and beef, part of a set of measures aimed at reducing food prices, Vice President Geraldo Alckmin announced on Thursday. The measures, which also include raising the import quota for palm oil to 150,000 metric tons, still need approval from a government trade body. They are expected to take effect in the next few days, Alckmin told journalists in Brasilia.

Biscuits, pasta, olive oil, sunflower oil and sardines also will be exempted from import duties, said Alckmin, noting that President Luiz Inacio Lula da Silva approved the policy change. Lula, as the president is known, has acknowledged creeping food prices while arguing that overall price pressures are under control in Latin America's largest economy.

Lula's push to curb food prices comes amid a recent decline in his government approval rating, which at 24% has sunk to its lowest level at any time during his three terms as president, a poll showed last month. Other measures announced by the government on Thursday include accelerating health safety testing of food products, as well as boosting food stocks from crop agency Conab.

Brazil's annual inflation rate ticked up to 4.96% in mid-February, its highest level since late 2023 as the central bank continues to tighten monetary policy with its benchmark interest rate standing at 13.25%. In the minutes of its latest rates decision, the bank pointed to a significant rise in food costs, mostly due to drought conditions as well as higher beef prices.

Currently, Brazil charges a 9% import tax rate for coffee and 7.2% for corn, while beef and sugar import duties can reach as high as 10.8% and 14%, respectively. Alckmin, who also serves as the government's industry, trade and development minister, insisted that the measures will not hurt local farmers, since they are designed to complement domestic food production and not replace it.

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