Rising inflation complicates the Covid-19 crisis in Brazil


After seven months in lockdown, Michele Marques received bad news when she returned to work: During her absence, the prices of almost all the products she uses as a hairdresser had skyrocketed.

“A box of gloves has increased by 200%. Hair color products have increased by at least 100%, ”said the 37-year-old from São Paulo, noting that costs were rising as her income collapsed. “I also had to increase the price of my services.”

It’s a dynamic playing out across Brazil, adding an extra layer of complexity to the country. coronavirus crisis, which has already claimed the lives of nearly 350,000 people and pushed hospital services to the brink of collapse.

With the shutdown of much of Latin America’s largest economy, inflation is skyrocketing at its highest level in years, fueling a silent scourge of hunger among the poorest citizens that has unfolded alongside the Covid-19 pandemic.

“The high price of staple foods – rice and beans, for example – has led to these products disappearing from the tables of millions of Brazilians,” said Ana Maria Segall, researcher at the Brazilian Sovereignty Research Network. Food and Nutrition and Security. In the 12 months leading up to the end of March, the price of rice increased by 64 percent and that of black beans by 51 percent.

“In Brazil currently, food inflation has penalized the poorest, preventing them from having adequate access to food and in many situations leading to hunger, ”she said, adding that the rise in unemployment and the reduction social programs were also contributing factors.

Volunteers distribute food in São Paulo © Alexandre Schneider / Getty Images

Less than half of Brazil’s population of 212 million people now have access to adequate food at all times, with 19 million people, or 9% of its inhabitants, facing hunger, according to a recent report by the group. Segall.

“I do odd jobs, but it’s not enough to keep us going,” said Jonathan, a 28-year-old who lost his job in the kitchen of a Chinese restaurant in São Paulo when the pandemic hit. start. He said he was now struggling to provide enough food for his three young children and his pregnant wife.

Over 12 months, inflation is expected to exceed 8% in June, well above previous estimates. In the 12 months ending in March, food prices jumped 18.5%, while the price of agricultural products in local currency jumped 55% and the fuel cost increased by almost 92%.

Line graph of percentage increase over the past 12 months showing The price of rice in Brazil is booming

The developments pose a new challenge to President Jair Bolsonaro, who is already under fire for its management of the Covid-19 pandemic. In Brazil’s largest cities, graffiti appeared, labeling the populist leader “Bolsocaro” – a coat rack named after him and the Portuguese word for dear.

The price hike is also likely to provide useful ammunition for former leftist president Luiz Inácio Lula da Silva, who returned into the political fray last month and could challenge Bolsonaro in next year’s election.

“Bolsonaro is to blame for the increase in food prices, he is to be blamed for everything. They have to remove this guy, ”said Maria Izabel de Jesus, a retiree from São Paulo.

Armando Castelar, a researcher at the Brazilian Institute of Economics, said the government had underestimated inflation both in terms of numbers and “how worrying it should be.”

He attributed the rise in prices to the devaluation of the Brazilian currency, triggered in part by the stimulus packages adopted by the US government – which helped to strengthen the dollar and led to higher Treasury yields – and to the outlook. better economies outside of Latin America.

“You have a situation where commodity prices are going up because the world economy is going to grow a lot this year. With growth in the United States, interest rates rise and the dollar strengthens. This puts a lot of pressure on the exchange rate in Brazil and emerging markets in general, ”he said.

As the specter of inflation loomed last month, the Brazilian central bank raised its key rate by 75 basis points, more than the half percentage point expected by many economists. Another rate hike is expected next month.

“The central bank has done the right thing, but it cannot stop there. It’s important not to be too soft on this, ”Castelar said.

Silvia Matos, coordinator at the Brazilian Institute of Economics, also highlighted the weakening of the Brazilian currency as a factor contributing to inflation. But she said that slip into reality was sparked by investor concerns about the deterioration of Brazil’s public finances.

Following the creation of two separate stimulus packages to mitigate the impact of Covid-19, public debt has risen to around 90% of gross domestic product, a high level for an emerging market economy.

The deployment of second of these packages started this month, with 45 million Brazilians expected to receive $ 50 a month for four months.

Critics, however, said those allowances were not enough to keep people both fed and at home locked out.

“It is essential that emergency aid has a greater value, so that people do not leave home but that no one also stays at home hungry,” said Marcelo Freixo, a federal lawmaker from the left-wing party. PSOL.

“We need to reduce the flow of disease. Brazil is already experiencing 4,000 deaths a day. We will reach a total of 500,000 deaths by the middle of the year. “

Matos says inflation hit poorer citizens much harder than middle-class Brazilians and the rich because more of their income was spent on food, the price of which has risen dramatically.

“The only thing that could help right now is to get out of this pandemic,” she said.

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