Brazil tax change spurs cosmetics inflation

Sao Paolo

HIGHER taxes in Brazil will drive up the cost of perfume, makeup and shaving cream 20 per cent or more this month, cosmetics distributors and industry groups warn, stoking inflation and weighing on the world's No 3 beauty market.

A new policy in May levying the industrial IPI tax on cosmetics wholesalers and producers is coming into full effect this month, lifting retail prices as much as 12 percentage points above inflation, according to trade association ABIHPEC (Brazilian Association of the Cosmetics, Toiletry and Fragrance Industry). Brazil's benchmark consumer price index has already climbed nearly 9 per cent in the past 12 months to an 11-year high.