Brazil’s inflation hits double digits, punishing the poor
RIO DE JANEIRO — It’s something Brazilians have rarely seen in a quarter-century, and the last time they did, in 2016, it helped set up a president’s downfall: double-digit inflation.
Soaring prices for gas, meat, electricity and more have left millions of poor Brazilians struggling to make ends meet. Inflation in the 12 months through September reached 10.25%, according to data the national statistics agency recently released.
Francielle de Santana, 31, lives in Rio de Janeiro’s Jardim Gramacho neighborhood beside a massive former landfill. With no running water or electricity, she salvages scrap to earn a living and can barely afford chicken.
“With 10 reais ($1.80), we used to get a lot, but now we only get three or four pieces. For three or four people, that’s little,” de Santana said. “Rice used to be three reais; now, it’s expensive.”
Nearby, 73-year-old retiree Leide Laurentino was cooking drumsticks on a makeshift wood stove. The price of cooking gas in September hit its highest in two decades, according to nonprofit Petrobras Social Observatory, and Laurentino is rationing hers.
“If I only cook with gas, I won’t have enough. Even for coffee, I use firewood,” she said. “Sometimes at night I can heat up food, but if it rains, I eat it cold.”
Costlier fuels reflect higher oil prices as nations with plentiful vaccines shuffle off the pandemic and resume life with mobility. Supply bottlenecks as global activity ramps up have boosted other prices.
Before slowing slightly in August, U.S. inflation was running at 5.4% annually, its fastest since 2008. The U.N. Food and Agriculture Organization’s food price index recorded a 10-year high in September.
But there are local effects stoking Brazilian inflation, too, said Andre Perfeito, chief economist at brokerage Necton.
The worst drought in nine decades depleted hydroelectric reservoirs, forcing the grid operator to fire up more expensive thermoelectric plants and the government to implement a “water scarcity” power rate. One of the world’s sharpest currency depreciations boosted the cost of imports. And price increases are stickier due to indexation, Perfeito said.
While headline inflation just entered double-digit territory, many specific items were already there. In the 12 months through September, electricity prices jumped 28.8% and cooking gas 34.7%, according to data released Friday. Chicken surged 28.8% and red meat 24.8%.
Inflation is one factor weighing on President Jair Bolsonaro’s approval rating — at its lowest since he took office. In Brazil, psychic scars linger from the hyperinflation days that came to an end in the mid-1990s. The previously elected president, Dilma Rousseff, was impeached in 2016 just months after inflation cracked double digits.
At recent protests against Bolsonaro, one year before his reelection bid, inflation was a common grievance.