Brazil’s inflation hits double digits, punishing the poor

RIO DE JANEIRO (AP) — 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 released Friday.

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 ten 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 told The Associated Press outside her wooden shack. “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 non-profit 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%.

Brazil was appalled last week by a Rio de Janeiro newspaper’s front page that showed people rooting through a truck’s load of animal bones. The photograph came as a punch to the gut in a nation that loves barbecuing.

Inflation is one factor weighing on 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 and began featuring in street demonstrations.

At protests against Bolsonaro on Sunday, one year before his reelection bid, inflation was a common grievance.

In a live broadcast on Facebook Thursday night, the president dedicated substantial time to inflation, displaying pictures of foodstuffs and comparing Brazil’s prices versus the U.S.

“This crisis is all over the world, not just Brazil. Some think I should do more to contain inflation. Do what else? Give an example,” he said. “And in some countries it’s not just inflation, but shortages. When will we return to normal? I don’t know, it will take time.”

On Oct. 4, the central bank’s president Roberto Campos Neto said inflation probably peaked in September. Economists surveyed by the central bank expect it will finish 2021 at 8.51%, then slow to 4.14% by end-2022.

That doesn’t mean poor Brazilians can rest easy, Perfeito said; the expected slowdown partially stems from forecasts for lower growth next year.

Unemployment remains high and the government’s pandemic welfare program that had been a lifeline to about one-third the population was already reduced, and will expire this month. Experts have been warning of rising poverty, including organization Oxfam that in July included Brazil on a list of emerging hunger hotspots.

The pandemic shed light on people with precarious jobs and those working informally, said Lauro Gonzalez, a professor at the Getulio Vargas Foundation who specializes in financial inclusion of Brazil’s poor. Many previously earned just enough to not qualify for social benefits.

That includes Jaqueline Silva, 19, who lost her job selling refrigeration equipment last year, couldn’t make rent and moved to a squat in downtown Rio with her infant daughter. She told the AP that she begged for the first time in her life — “I was dying of shame, but I had to” — then began receiving some donations of diapers and basic foodstuffs. She’s been hunting for any job, with no luck so far, and joined the people who scavenge scraps from the meat truck.

“I was pretty embarrassed at first, but now it’s practically become routine,” Silva said while awaiting its arrival.

But the truck didn’t come, apparently due to shockwaves from the newspaper coverage. That meant Silva and others gathered would need to find another source for meat — or go without.

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AP videojournalist Lucas Dumphreys contributed.