Opinion – Maria Inês Dolci: Escalation of the Selic threatens consumption

It is likely that most Brazilians do not know what the Selic rate is – which serves as the basis for interest rates in the economy. But it is important that everyone pays attention to the rise in the Selic, because all products and services, in some way, will become even more expensive with this rate at 10.75%, the highest level since 2017.

And what do we, consumers, who are not investors, economy ministers or bankers, have to do with it? The Selic, which between August 2020 and the first days of March 2021 was at 2% – the lowest rate in history –, has been rising since then to fight high inflation rates. It is much more difficult, for example, to buy a financed property.

When money becomes more expensive, the economy contracts, growing less, or even retreating. With less economic activity, there would be less room for price adjustments, and inflation would theoretically stabilize and fall.

It so happens that the dollar rate remains very high, and this pushes prices up, especially those of the so-called commodities —soybean; beef, pork and chicken; sugar; coffee etc. In addition, even with the drop in consumption, fuel and cooking gas prices continue to rise, as well as the electricity bill. Regrettably, we have the highest real interest in the world!

In other words, on the one hand, there is stagnation of the economy, on the other, high inflation, which constitutes the hell of stagflation. Everything becomes more expensive, while there is less employment and flattened income.

And what can we, mere mortals, do to change this bad scenario? Elect deputies, senators, governors and the president of the Republic who cut useless expenses –such as the secret budget of the National Congress–, and who invest in education, science and technology, and health.

Even better if they readjust the infamous IR (Income Tax) table, as millions of Brazilians who would be exempt continue to pay this tax. What they pay in IR is no longer used to buy products and services, which reduces the standard of living and makes it difficult for the economy to revive.

As for the waste of public money, an example: in last December, in almost half of the more than R$ 4 billion in parliamentary amendments, there was no name of identified congressmen. That is, those responsible for the orders were not publicly disclosed.

Meanwhile, the economy’s basic interest rates rise, postponing the resumption of business and jobs, and the recovery of family income.

Civil society associations should closely monitor these processes, demand, denounce and involve the community. This is our role!