Accumulated inflation since the Real Plan reaches 653%

​Since the launch of the Real Plan, in July 1994, accumulated inflation in the country has reached the mark of 653%, according to a survey by economist Bruno Imaizumi, from LCA Consultores, which considers the variation of the IPCA (National ).

With the erosion of purchasing power provoked by inflation over these 28 years, the R$100 bill today buys the same amount that it would have been possible to buy with R$13.91 in 1994, discounting inflation.

Also according to the economist, when doing the reverse calculation, the same R$ 100, in July 2022, would correspond to about R$ 748, in July 1994.

In the same range, the minimum wage went from R$64.79 to the current R$1,212, an increase of approximately 1,770%.

“As much as we have observed an increase in prices over the last 28 years, in general terms, the minimum wage has also grown in this period. The problem is that in the last two, three years, Brazilians have been losing purchasing power on both sides. , with a recomposition of income that is insufficient to compensate for the rise in the prices of basic items, such as food and energy”, says the LCA economist.

Imaizumi adds that the current situation has led to situations of purchase of worse quality products, mainly by the population with lower purchasing power.

Bad debt at record levels

He also recalls that, in a scenario of interest and inflation running at high levels in the country, and with an economic activity with difficulties to start, people with overdue bills have reached record levels.

Data from the Serasa Experian Consumer Default Indicator show that Brazil broke the record with 66.6 million defaulters in May, the highest number since the beginning of the historical series, in 2016.

Also according to Serasa data, compared to May 2021, there was an increase of 4 million negative names.

Among the main factors that have contributed the most to the picture is the persistent inflationary pressure. Driven by higher prices for food away from home and health insurance, the country’s official inflation index rose 0.67% in June.

To combat the rise in prices, the BC (Central Bank) has promoted since the beginning of last year a series of increases in the basic interest rate, the Selic, which went from the historic low of 2% per year to the current 13.25 %.

The increase in the cost of money, in turn, puts additional pressure on household income, which still has to live with an unemployment rate close to double digits.

Economists point out that, despite the measures that have been adopted by the government in an attempt to reduce inflationary pressure, with cuts in fuel and energy prices, their effectiveness is only in the short term, and with the risk of leaving a perverse legacy to from 2023.

“With the electoral measures that we have seen, for each additional growth that is played for this year, it is being taken away from next year. And, for every percentage of inflation that is taken away this year, it is thrown into next year” , said the chief economist at the consultancy MB Associados, Sérgio Vale.

According to Serasa Experian economist, Luiz Rabi, despite the expected increase in default, it is possible to improve the situation. “Consumers need to continue organizing themselves financially and using available tools, such as the withdrawal of the FGTS (Fundo de Garantia do Tempo de Serviço), to try to get the name out of the red.”