More than half of the population cuts consumption due to inflation, says survey

The rise in prices made the car keeper Rosenilton de Souza Borges, 38, change consumption habits and cut a series of expenses. He says he started leaving his car in the garage to go to work by bus, cut the internet from home and even replaced red meat with chicken and eggs.

“The car only starts from time to time so as not to lose the battery”, he says. “In terms of food, what weighed the most was meat and oil. I don’t even buy milk anymore”, says he, who works in central Brasília and lives at home with his wife and three children between the ages of 12 and 17.

Like Borges, more than half of the population has cut expenses in the last six months due to rising prices, according to a survey commissioned by the CNI (National Confederation of Industry) to FSB Pesquisa.

According to the survey, 54% of people consider themselves to be in a financial situation very affected by inflation and 64% have cut consumption of goods or services in the last six months due to price increases.

The poorest are even more affected. In families with an income of up to one minimum wage, 63% say they are being greatly affected by rising prices and 67% say they have cut consumption of goods or services.

In the cut by eliminated products, non-essential items are at the top of the list. About a third of respondents stopped buying construction materials (34% of the total) and having paid TV (29%) in the last six months.

In addition, more than a fifth of people stopped eating out (24%) and buying appliances or electronics (23%).

Rising fuel prices have also led to drier tanks. Nearly one-sixth (or 15%) of the population has eliminated consumption of gasoline, alcohol or diesel following the soaring oil price amid Ukraine’s war.

Marcelo Azevedo, manager of economic analysis at CNI, says that inflation takes away the population’s purchasing power, reduces consumption and affects the results of companies — generating problems throughout the economy.

“With this rise in prices, we see a very significant drop in the purchasing power of families. We see the employment rate falling, but the real income does not follow this movement”, he says.

“It’s a lose-lose, because consumption is the great engine of the activity. So there are no winners in this story, the whole economy locks up”, he says.

According to him, the data show that the most eliminated goods so far are those whose consumption can be postponed. Even so, the results show that part of the population is in a more serious scenario for cutting food from the menu.

Azevedo says that there are signs of a slowdown in the problems of supply of raw materials – something that permeated the entire Covid-19 crisis due to the interruption of global chains (due to the closure of factories and other activities) and reduced product inventories.

Despite this, he says, the gradual normalization of the chain could come at a time when people don’t have the money to buy. “At the same time that there is a beginning of relief in the supply of raw materials, it is more evident that it begins to have problems at the time of sales”, he says.

Another point of concern is the population’s expectation that inflation will remain high, which also adds limitations to purchase intentions. Almost half (43%) of the population thinks that the price of goods and services will continue to rise a lot in the coming months.

In March, inflation measured by the IPCA (National Index of Broad Consumer Prices) in 12 months reached 10.54%. By remaining in double digits, the IPCA remains far from the inflation target pursued by the BC (Central Bank). The center of the benchmark measure this year is 3.50%. The ceiling is 5%.

According to a Datafolha survey at the end of March, 1 in 4 Brazilians said that the amount of food available was less than what was needed to feed the family in recent months.

The poorer the poorer, the more food inflation is perceived, as housing and food consume most of the income. According to stratification by Datafolha, 53% of Brazilian households go through the month with less than two minimum wages (R$ 2,424). In them, 35% accused lack of food.

A survey by the Penssan Network at the end of 2020 (before the food boom last year and now) showed that more than half (55%) of Brazilians suffered from some type of food insecurity (severe, moderate or mild).