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Economy in Brazil: inflation wipes the gains of “Plano Real”

The price shock that brought inflation in the highest mark in 28 years caused an abrupt loss of achievements of Brazilians since the Real Plan.

The price shock that brought inflation in March 2022 to 1.62%, the highest mark for the month in 28 years, and that of the last 12 months at 11.30% caused an abrupt loss of consumption achievements of Brazilians since the Real Plan.

Meat, yogurt, cheese, stuffed crackers, items that had become accessible in recent decades are now leaving the shopping list for part of the population – which is the most visible example of a situation of loss of income, high unemployment and higher costs.

In recent months, 73.1% of consumers stopped buying meat, almost 10% cut yogurt, cheese, dairy products and alcoholic beverages and close to 6% did not take to the house biscuit and beans, basic food, reveals research by the Union of Retail Trade of FoodStuffs of the State of São Paulo (Sincovaga), made by JFP Consultoria and obtained by Estadão.

The study, which heard at the beginning of the month 200 consumers with family income of up to ten minimum wages (R$ 12,120 or approximately 2,577 USD) when shopping in supermarkets in the state capital, shows that 52% stopped consuming some products of all kinds including food, beverages, fresh produce and cleaning items.

With the price increase, 79% of survey participants started to take a smaller volume of items home. Caretaker Marcelo Domingos dos Santos, 50, is one of those who curbed consumption. He spends today R$ 700 (approximately 148 USD) on the purchase of supermarket, without taking everything he needs home, where he lives with his wife and two children. Until recently, he disbursed R$ 500 (approximately 106 USD) and left the supermarket with a full cart.

“It’s been a year since we’ve reduced meat consumption. Even the ground beef is difficult to buy.”

Marcelo Domingos dos Santos, 50

Yogurt — one of the symbols of the improvement in consumption brought by the Real Plan — he doesn’t even remember when he last bought it.

The change in Brazilian consumption habits caused by the soaring inflation goes beyond reducing the quantities of basic products purchased and eliminating others. It also affects the choice of when and where to buy. is that the strong fuel increase imposed additional transport costs. 

A Sincovaga survey shows, for example, that 67% of consumers are shopping less frequently and almost half (46%) admit that the increase in the price of fuel influences the choice of store where the expense is made. The preference became neighborhood market, where you can go on foot. This is the place chosen by 46.3% of respondents, surpassing supermarkets (29.6%), hypermarkets (22.2%) and even online commerce (20.4%). 

Because of the smaller movement in these establishments and the slower turnover of goods, Álvaro Furtado, president of Sincovaga, explains that the neighborhood store takes longer to update prices. Also for this reason, the neighborhood store gains consumer preference in an environment of high inflation, he argues. 

Sources

By Itamar Medeiros

Originally from Brazil, Itamar Medeiros currently lives in Germany, where he works as Director of Design Strategy at SAP.

Working in the Information Technology industry since 1998, Itamar has helped truly global companies in several countries (Argentina, Brazil, China, Czech Republic, Germany, India, Mexico, The Netherlands, Poland, The United Arab Emirates, United States, Hong Kong) create great user experience through advocating Design and Innovation principles.

During his 7 years in China, he promoted the User Experience Design discipline as User Experience Manager at Autodesk and Local Coordinator of the Interaction Design Association (IxDA) in Shanghai.

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