Prices are rising in many countries as demand for goods and services regains after a year and a half pandemic. But while in many places the economy is regaining, the Brazilian economy is not getting started. Some economists even speak of stagflation, a depressing combination of stagnation and inflation.
In practice, the sharp price increases cause millions of Brazilians to get into trouble. Take the Moura family in São Paulo. Forty years ago, Omar and his wife Toninha bought a small apartment in a gated residential area of the city.
They raised two children: Vanessa and Omar Júnior. “We were a typical middle-class family,” Toninha says proudly. That time is over. “Now you can call us poor,” Vanessa sighs. The pandemic caused her to lose her job. Vanessa lives with her parents again, with her ten-year-old son. Her brother Júnior also became unemployed, and lives back at home: with five people in 55 square metres.
100 real for groceries
Omar and Toninhas pension is not enough to pay all the bills, both of them replenish their income. He repairs broken televisions and other electronics, she sells clothes. Inflation is the talk of the day, not just with the Moura family. It affects just about everyone, and also evokes fearful memories.
“Look,” says economist Thomaz Sarquis, as he rolls up his sleeves. He got a whimsical chart tattooed on the inside of his biceps. “The history of inflation in our country.” He points out an outlier upward. “That was the time of hyperinflation, at some point in the 1990s, annual prices rose more than 6000% on an annual basis. Many people still know that well and are like death that something like this can happen again.”
Although Sarquis does not expect the weather to be as bad as it was then, it is clear that prices will continue to rise for a while now. The Moura family notices that every day. “We still have 100 real left for groceries,” Vanessa says as she walks to the grocery store. This is about sixteen euros at the current exchange rate.
At the butcher she orders fifteen real beef, a pathetic bag. “This isnt enough for five people,” Vanessa says. “Then chicken.” But with the pulley, chicken also appears to have become more expensive. “Almost doubled in price, if you compare it to the beginning of this year,” she sighs.
“The situation in Brazil seems more serious than in most other countries where prices are rising at the moment,” says economist Thomaz Sarquis. “Were dealing with a perfect storm, several big shocks at the same time. Brazil is suffering from a historic drought, which has made food and the price of electricity more expensive.” Brazil is very dependent on hydroelectric power plants.
“There is also the political chaos,” Sarquis continues. President Bolsonaro has been dealing with Congress and Supreme Court.
“That instability creates a lot of uncertainty. That has a negative impact on the real, one of the coins worldwide that has fallen in value most in the past year.” An expensive dollar is working on Brazilian prices, emphasizes the economist. “Finally, Brazil spends much more than it deserves, and that also increases inflation.”
Vanessa notices it in her wallet. Its pretty much empty, while her shopping cart isnt half filled yet. She charges 98.70 real, pretty much the entire budget for Moura family groceries for the rest of the week.
Shes worried about the future. “The fact that we still manage to pay for everything and put enough food on the table is a miracle,” she says. “But we cant keep magic.”
Bolsonaro responsible for inflation
She blames President Bolsonaro, and even her parents do. Toninha and Omar both voted for Bolsonaro but are now disappointed. “That man has to leave,” Toninha says under the food. “As long as he stays president, I dont think the situation improves.”
A recent poll shows that 75 percent of Brazilians surveyed believe that Bolsonaro is at least partially responsible for inflation.
There are two pieces of chicken per person, with lettuce, rice and beans. Today it worked out, but if there is enough food for everyone tomorrow, the Moura family isnt so sure today.