Fair inflation of up to 166% scares consumers and empties carts

“It’s a lot of increase. It’s going to fall back when we go shopping. Today there’s a price, tomorrow it goes up.”

This is how the retired Pilar Ramos, 74, describes the soaring inflation of fruits and vegetables at the beginning of this year.

The concern of Pilar, a resident of Rio de Janeiro, is supported by official data from the IBGE (Brazilian Institute of Geography and Statistics).

With the effects of adverse weather and the pressure generated by fuels on freight, the prices of traditional food at open markets accelerated in the country.

Until March, the carrot accumulated inflation of 166.17% in 12 months, according to the IPCA (National Index of Consumer Prices), calculated by the IBGE. Tomatoes, in turn, advanced 94.55%.

Peppers (80.44%), melons (68.95%), watermelon (66.42%) and cabbage (64.79%) also registered strong increases in the period. Papaya (54.95%), zucchini (44.99%) and lettuce (38.92%) did not escape the famine either.

“Sometimes we stop buying. Or, when a product increases a lot, we try to buy another one that is cheaper,” says Pilar amid stalls selling fruits and vegetables at an open-air market in the south of Rio.

Born in Spain, the pensioner has lived in the capital of Rio de Janeiro since she was 19 years old. “I’m from Rio,” she jokes.

Like Pilar, domestic Leda Ferreira, 72, is also worried about food inflation.

“Prices have increased absurdly”, he laments.

With the pressure on her pocket, Leda reduced the number of trips to fairs in Rio. The size of purchases has shrunk.

Economist Gustavo Prado, 34, adopts a similar strategy. Due to the scarcity, he started to focus on the search for fruits and vegetables that he considers essential for his daily life.

“It’s something impressive. For about three years, I used to do fairs with R$150 or something in that range. Now, I close the account with about R$280, and cutting out a lot of non-essentials.”

The scare with food inflation is not restricted to consumers and still affects marketers.

On Tuesday morning (19), Giovani Almeida da Silva, 53, had to explain to a client at his bank in Rio why garlic had become more expensive.

“When product prices are high, we reduce purchases to resell at the fair. We sell less. The customer wants to buy and often cannot”, he comments.

Marketer Flávio Giovanni Borges de Arruda, 39, recalls that, in addition to food, other inputs also became more expensive in the pandemic. This is the case with fuel and packaging and plastic bags.

“I have been working with the least possible margin. There is no way to pass on the entire increase to prices. If we do that, the sale stops”, he says.

Arruda reports that he has worked as a street vendor in Rio for over 20 years, but has even considered abandoning the activity due to cost pressure in recent months.

“The logic now is to survive. It’s not enough to keep”, he says.

“I paid R$15 for a papaya box [com 15 unidades] in December. Earlier this year, it already cost R$50”, he adds.

Climate and cost pressure

According to the IBGE, the increase in food prices in early 2022 reflects the impact of the climate.

There were heavy rains in areas of the Southeast and Northeast, while the South suffered from drought at the start of the year.

The extreme phenomena damaged crops, reducing supply and putting pressure on final prices.

In addition, according to the institute, the increase in fuels also generated reflexes, as it raises the costs of transporting various goods, including food.

“We had a supply shock with climatic problems in part of the main production centers. In addition, there was an increase in costs”, evaluates analyst Fernando Gomes, from Itaú BBA.

“Fuel is an important factor inside and outside the gate [das propriedades rurais]. Inside, the producer uses a lot of diesel with tractors. Outside, there is the cost of transport. The productive centers are far from the capitals”, he points out.

According to Gomes, the prices of fruits and vegetables may even fall in the short term, but the tendency is for them to remain at a high level.

In addition to cost pressure being on the radar, time is needed for supply to be recomposed in plantations punished by the weather, says the analyst.

This period varies from product to product. Some fruits can take a year for the supply to recover, while vegetables have faster production cycles, says Gomes.

Food inflation is not unique to Brazil during the pandemic, although internal factors have intensified the surge.

As a Folha report showed, the main global food price index of the United Nations reached its highest level in 61 years in March, and the IMF (International Monetary Fund) series from 1900 onwards points to a record in 100 years.