Inflation: how high prices are hitting Brazil and other countries

The cost of basic items such as food and fuel is on the rise all over the world.

Crop failures, the pandemic and a shortage of natural gas are among the reasons behind the famine, but some countries and regions are suffering more than others.

Check out how rising prices are affecting Sub-Saharan Africa, Turkey, Sri Lanka and also Brazil.

Sub-Saharan Africa

Sub-Saharan Africa is the region of the African continent south of the Sahara Desert. The area comprises 46 countries, many of them the poorest in the world.

In the region, it is common to use LPG (liquefied petroleum gas, better known as bottled gas) as the main fuel for cooking. However, LPG prices are on the rise.

In some regions of Nigeria, the price of cooking gas at distributors has more than doubled in the last year, according to the country’s official statistical body.

As a result, many people are turning to wood, charcoal or cheaper and more polluting fuels such as kerosene. This is not only harmful to the environment, it is also harmful to the health of those who cook.

Rising oil prices have also increased the cost of fertilizers and the cost of transporting food from the countryside to stores and markets.

The drought affected crops in several African countries, according to NASA’s Earth Observatory (United States Aerospace Agency). This also contributed to inflation.

In Angola, the price of food rose 36.4% in the last year, according to the country’s National Institute of Statistics.

The United Nations estimates that there are 282 million malnourished people in Africa today.

In Malawi — a country in southeastern Africa, close to Mozambique — the rising cost of living has recently led to massive anti-government protests.

Turkey

In December, thousands of people protested in Istanbul and the southeastern city of Diyarbakir against rising cost of living.

Inflation rose 36% last year, according to the Turkish Statistical Institute (TSI). Food prices rose 44% over the year and 14% in December alone.

In Istanbul, thousands of people line up to buy bread at state-owned bakeries, where prices are subsidized, because they cannot buy bread from private bakeries.

Bread prices rose in part because of higher fuel and fertilizer prices, but also because the Turkish government raised the minimum price for wheat and barley to improve farmers’ incomes.

And it’s not just food that’s getting more expensive. According to TSI, bus, train and ferry fares increased by more than 50% in 2021. Electricity and gas bills rose by 50% and 25%, respectively.

Governments often try to control rising prices by raising interest rates. This makes borrowing money difficult and reduces the circulation of foreign exchange.

However, Turkish President Recep Erdogan has refused to do so, saying high interest rates are “an evil that makes the rich richer and the poor poorer”.

Last year, the president ordered Turkey’s central bank to cut interest rates. This caused the Turkish lira to depreciate by 45% against the dollar and raised the price of imported products.

The government’s response to inflation was to raise the minimum wage by 50%.

Economist Ozlem Derici Sengul, founding partner of Spinn Consulting in Istanbul, warns that inflation in Turkey will reach 50% by spring — which in the country runs from March to June.

Investment bank Goldman Sachs predicts it will rise to between 40% and 50%.

Brazil

In Brazil, inflation is rising by more than 10% a year and fuel has risen by 50%, according to the IBGE (Brazilian Institute of Geography and Statistics).

Food prices rose 14% last year, with a severe drought causing prices of staple foods such as rice and beans as well as animal feed to rise.

Brazil has the largest cattle herd in the world, even so, meat prices increased so much last year that 67% of the population declares to have reduced their consumption of the product, according to a survey by the Datafolha institute.

The cost of electricity has also increased due to the drought.

The hydroelectric plants, which generate most of the country’s energy, had to stop producing due to lack of water, being replaced by thermoelectric plants.

This caused domestic electricity tariffs to rise sharply last year, according to the IBGE.

The standard of living in Brazil is at its worst moment since 2012. Fundação Getulio Vargas estimates that 27.7 million people, out of a total population of 213 million, live below the poverty line of R$261 per month.

Sri Lanka

Food in Sri Lanka is up more than 20% from a year ago, according to the country’s official inflation index, as the island state has struggled to finance imports of essential items.

The Covid-19 pandemic meant that, for two years, Sri Lanka was unable to generate the income it normally obtains from tourism. As a result, its foreign currency reserves have plummeted.

The government has had to restrict food imports because commercial banks are running out of foreign currency to pay for them.

This has produced shortages in markets and sharp price increases for many staples such as rice, wheat flour and powdered milk.

Cooking gas had a price increase of 85% in the year, according to the official inflation index.

To calm the population’s growing discontent, the government launched a US$1 billion aid package — including salary and pension increases for government employees.

It also removed taxes on some food and medicine and announced a cash transfer policy for its poorest citizens.