International

Brazil’s inflation in double digits, punishment to the poor

By The Associated Press

RIO DE JANEIRO: It’s something Brazilians have rarely seen in a quarter century, and the last time they did it in 2016, it helped set off the downfall of the president: double-digit inflation.

Rising prices of gas, meat, electricity and more have left millions of poor Brazilians struggling to make ends meet.

Inflation reached 10.25 per cent in the 12 months to September, according to data released by the National Statistical Agency on Friday.

Franciel de Santana, 31, lives next to a huge former landfill in Rio de Janeiro’s Jardim Gramacho neighborhood.

Without running water or electricity, she saves scraps to earn a living and can barely afford chicken.

“With ten reais ($1.80), we used to get a lot, but now we only get three or four pieces. For three or four people, that’s too little,” de Santana told the Associated Press outside his wooden shack. told.

“Rice used to be three nobles, now it is expensive.”

Nearby, 73-year-old retired lead Laurentino was cooking drumsticks over a makeshift wood stove.

According to the non-profit Petrobras Social Observatory, the price of cooking gas in September was the highest in two decades, and Laurentino is rationing it.

“If I only cook with gas, I won’t have enough. Even for coffee, I use firewood,” she said.

“Sometimes I can heat food at night, but if it rains, I eat it cold.”

The costly fuel reflects higher oil prices as nations with plentiful vaccines overcome the pandemic and resume life with dynamism.

Supply constraints due to pick-up in global activity have pushed up other prices.

Before slowing slightly in August, US inflation was running at 5.4 percent annually, the fastest since 2008.

The Food Price Index of the Food and Agriculture Organization of the United Nations recorded a 10-year high in September.

But there are also local influences driving Brazilian inflation, said Andre Perfito, chief economist at brokerage Nekton.

The worst drought in nine decades exhausted hydroelectric reservoirs, forced grid operators to set fire to more expensive thermoelectric plants and forced the government to enforce water shortages. electricity rate.

One of the world’s fastest currency depreciations boosted the cost of imports.

And price increases are sticky due to indexation, Perfito said.

While headline inflation has just entered double-digit territory, several niche items were already in place.

According to the data released on Friday, electricity prices have increased by 28.8 per cent and cooking gas prices by 34.7 per cent in the 12 months since September.

Chicken rose by 28.8 per cent and red meat by 24.8 per cent.

Brazil was stunned last week by the front page of a Rio de Janeiro newspaper that showed people in a truck laden with animal bones.

This photo came as a punch in the gut of a barbecue-loving country man.

Inflation is a factor on Bolsonaro’s acceptance rating, which is the lowest since he took office.

In Brazil, mental scars remain from the days of hyperinflation that ended in the mid-1990s.

The previously elected president, Dilma Rousseff, was impeached in 2016, when inflation broke into double digits and street demonstrations began to take place.

In the protests on Sunday, a year before Bolsonaro was re-elected, inflation was a common complaint.

In a live broadcast on Facebook Thursday night, the president devoted substantial time to inflation, displaying photos of food items and comparing Brazil’s prices to the US.

He said, “This crisis is not only in Brazil, but all over the world. Some people think that I should do more to control inflation. What else to do? Give an example.”

“And in some countries it’s not just inflation, but scarcity. When will we return to normalcy? I don’t know, it will take time.”

On 4 October, central bank president Roberto Campos Neto said inflation was probably at a peak in September.

Economists surveyed by the central bank expect it to end 2021 at 8.51 percent, then slow to 4.14 percent by the end of 2022.

That doesn’t mean that poor Brazilians can rest easy, Perfeito said; The expected slowdown partly stems from forecasts for lower growth next year.

Unemployment remains high and the government’s pandemic welfare program which was the lifeline for nearly a third of the population has already been cut short, and will end this month.

Experts have been warning of rising poverty, including the Oxfam organization that in July included Brazil in a list of emerging hunger hotspots.

The pandemic highlighted people with precarious jobs and those working informally, said Lauro González, a professor at the Getulio Vargas Foundation, which specializes in the financial inclusion of Brazil’s poor.

Many previously earned enough not to qualify for social benefits.

That includes Jacqueline Silva, 19, who lost her job selling refrigeration equipment last year, couldn’t afford rent, and moved into a squat in downtown Rio with her newborn daughter.

She told the AP that she begged for the first time in her life. I was dying of shame, but I… then started receiving diapers and some donations of basic food items.

She’s been looking for any jobs so far with no luck, and joins people who take out scraps from meat trucks.

“At first I was very embarrassed, but now it’s practically routine,” Silva said as he awaits his arrival.

But the truck did not arrive, apparently due to shock from newspaper coverage.

This means that Silva and the other gathering people would need to find another source for the meat, or go without.

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