in Brazil, the return of inflation

In the public market of Largo do Machado, in the heart of Rio de Janeiro, the masks have fallen, but the mines remain worried. Because the Covid-19, which marks a decline, has succeeded another evil, just as distressing: inflation. “Everything has increased so much lately. We have to be careful with everything we buy”, complains Elaine, a customer in her fifties, wandering shopping bag in hand between the stalls and the tropical trees. Some prices, such as those of carrots or tomatoes, have doubled in a few weeks. I buy the minimum, I don’t let anything expire. And, unfortunately, I had to stop red meat”she says.

This week, I could only afford one carrot”, drops in passing another consumer, looking worried. On the Largo, the distress of traders is also noticeable. “People are buying less and less, and suppliers are selling more and more expensively. As a result, my profits have dropped by 30% to 40% in recent weeks,” says Bruno, a young fruit and vegetable seller, dressed in a green apron. He is fatalistic about the future: What to do ? All I have left is God, prayer and waiting…”

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Indeed, the situation is alarming: according to official data, inflation reached 1.62% in March, unheard of for this period since 1994. This rate, which may seem modest, does not take into account the maddening increase prices of basic necessities, in particular food: + 19.51% for papayas, + 27.22% for tomatoes, + 33.12% for peppers or even + 31.47% for carrots, whose value per kilo has increased by 166.17% over one year.

Ineffective stabilization plans

These numbers have been referred to as terrifying by some of the press and economists, willingly alarmists. Brazil remains traumatized by a cycle of hyperinflation, which, between the 1980s and 1990s, saw prices soar up to 2,000% per year. After fifteen ineffective stabilization plans and five successive changes of currency, the country managed to curb the phenomenon in 1994, thanks to a cocktail of measures called “Plano real”, drawn up by the Minister of the Economy at the time, Fernando Henrique Cardoso, elected president the same year.

The Covid-19 crisis has slowed production. As for the war in Ukraine, it has increased the price of wheat, gas and in particular oil, essential to the functioning of an economy very dependent on road transport.

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