Imagine that a person goes to a supermarket to buy all the ingredients needed to make a typical Brazilian dish.
The ingredients for the dish vary according to the region, but for this exercise we are considering seven foods: rice, carioca beans, tomato, lettuce, rump, potato and eggs.
If today a person would spend around BRL 100 to buy all the ingredients for this dish made, a year ago – in April 2022 – the same person would have spent only around BRL 85 on the same ingredients, according to IPCA data ( Broad Consumer Price Index), the main inflation reference of the IBGE in Brazil.
(In this purchase we are not taking into account the size of the portions, what will be left of each food or the cost of other variables, such as seasonings, cooking oil and gas price for cooking.)
Food has become the main culprit of Brazilian inflation – general prices in the economy have risen 12.13% in the last 12 months, but food at home (which excludes food purchased in restaurants) has risen 16.12%. In the last month, food and transport accounted for 80% of the general rise in prices in the country.
Some items of the typical Brazilian dish became cheaper in a year, such as rice and black beans. But they are in the minority — more than 90% of the products are more expensive, most with increases of more than 10%.
And to make matters worse, analysts believe that prices are likely to rise even more this year.
substitutes?
Even in the face of rising prices, there are ways to mitigate the effect of inflation on the plate of Brazilians looking for substitutes.
Some important food items in the basic basket fell. Rice became 11% cheaper in one year. Carioca beans increased by 9.4%, but they can be replaced by black beans, whose price has dropped by almost 7%.
The rump (which rose 13%) is another item that can be replaced — with pork (which price dropped by almost 6% a year) or dried and sun-dried beef (which price rose 3%, a lower adjustment than average inflation). Already the chicken – which is usually cheaper alternative protein – also had high inflation, 21%.
The English potato rose 63%, but the sweet potato had a much smaller readjustment, of 3.58%.
In salad, substitution is more difficult. Tubers, roots and vegetables were 69% more expensive in one year; vegetables and greens rose 36%.
Outside lunch, food can be supplemented with fruits whose prices have dropped in a year or have registered little inflation. This is the case of pineapple and apple banana (which are 3% and 5% cheaper, respectively) and orange-pear (whose price has increased by 4%). But other banana and orange varieties had big price adjustments.
It is also important to point out that this inflation is national — that is, that prices varied differently according to the region of Brazil.
Lagging salary and price acceleration
The most recent IBGE bulletin reveals three trends: wages are not keeping up with the rise in food prices, prices are rising more rapidly this year and most food in supermarkets has had major readjustments.
Food at home was 16.12% more expensive in Brazil, on average — between April 2021 and April this year. The increase is much higher, for example, than the 10.18% readjustment in the minimum wage that took place at the beginning of 2022.
Another study confirms that most Brazilians are failing to “beat inflation.” In March, only 13.9% of salary negotiations in Brazil measured by Dieese produced real gains for workers, above inflation. In 34% of the negotiations, the categories managed to “break even with inflation” — and in 52% of these agreements, workers had increases that do not cover the rise in prices in the economy.
Another worrying trend is that prices appear to be rising faster this year.
The IPCA (which measures not only the price of food, but also of various goods and services) rose 1.06% in April —the biggest change for a month of April in 27 years. Accumulated inflation for the last 12 months is 12.13% — up from 11.30% in the previous 12 months.
And the rise in food is what worries me the most — food and drinks were 2.06% more expensive in just one month.
Anyone who goes to the supermarket can see exactly how food has become the “villain” of Brazilian inflation.
Of the 159 foods whose prices are monitored by the IBGE, only 9% (14 of them) had a drop in prices in the last 12 months (check the table below for the prices that fell the most and those that rose the most). The remaining 91% became more expensive – with 54% (or 84 items) having a significant increase of more than 10%.
Three products — carrots, tomatoes and zucchini — more than doubled in price in just one year.
Why more expensive?
The movement of high prices is not isolated in Brazil.
Even rich countries with low inflation histories – like the UK and the US – are facing the biggest price hike since 1982. The UK is currently experiencing a “cost of living crisis”, with soaring food and energy prices.
Some reasons for this surge are common around the world: problems in global supply chains (which never fully recovered from the pandemic) and the Ukrainian War (which made the price of energy soar, with sanctions imposed on Russia, in addition to problems in the supply of cereals produced in Ukraine).
In Brazil, these variables all had a direct impact on the price of food, also due to the increase in the cost of freight transport.
Will prices stop rising?
Prices are expected to get even more expensive this year, according to some analysts.
Broker XP increased its food inflation forecast for this year — from 9.5% to 11.1% — in a study released in May. With this, he predicts that general inflation in Brazil will close the year at 9.2%.
“Our forecast for food prices considered the inflationary effects of the Ukrainian War. [agora] our projection to encompass the secondary effects of higher fuel and other costs in the group”, says the bulletin.
For next year, the broker predicts that food will continue to rise, but at a slower pace: 3.5%.
XP lists three reasons why inflation will remain high: the severe lockdowns in China due to the Covid pandemic (which cause disruptions in global supply chains), the high probability of new fuel readjustments in Brazil (according to the study, the price in Brazil is still 20% out of date in relation to abroad) and a surge in service inflation (which makes other prices in the economy, including food) more expensive.
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
