UPDATE 2-Argentina takes a jab at inflation by cutting fuel prices
(Adds oil company source, details and context)
By Hugh Bronstein
BUENOS AIRES Dec 23 (Reuters) - Argentina will cut the price for crude oil produced and sold in the country to allow a 5 percent reduction in gasoline prices, the government said on Tuesday.
The federal government, which regulates domestic energy prices, announced a $7 per barrel cut in the fixed price of crude under a deal struck with private oil companies and oil-producing provinces in Latin America's No. 3 economy.
The measures will help ease price pressures on consumers facing one of the world's highest inflation rates. But it could disappoint producers, who have said a significant cut could jeopardize investment flows.
The gasoline price cut would take effect on Jan. 1, Economy Minister Axel Kicillof told reporters.
Inflation is running at about 40 percent, according to economists, though the government clocks it at nearly half that.
The government has set the price of local crude below international market prices, but the slump in global prices has left Argentine consumers suffering while producers benefit.
The local price of oil was a major obstacle to cutting fuel costs. Tax breaks to cushion the impact of lower prices were part of the marathon talks, but Kicillof said details would be made public only at a later date. Continuación...