Among the immense range of topics that economic sciences study, the most sensitive of them is certainly inflation, at least for Brazilians. We don't need to try very hard to find out why this is, just talk to anyone over forty years of age and we will hear terrifying accounts of the despair of people rushing to supermarkets after receiving their payments.
This happened with the aim of guaranteeing the purchasing power of their receivables - being able to buy as many goods as possible with the money they had - before the prices were adjusted by the establishments' "labeller". With inflation in Brazil reaching an incredible 2500% per year in 1993, all of this fear among Brazilians is justified, after all, it has only been 28 years.
Considering IBGE data, inflation calculated for families receiving up to 40 minimum wages (IPCA) was 2.04% in the first quarter of 2021, with the accumulated figure for the last twelve months being 6.10%. The inflation calculated for families earning up to 5 minimum wages (INPC) was 1.96% in these first 3 months, with the accumulated inflation in the last 12 months being 6.94%.
Food inflation measured for these families earning up to 5 minimum wages (INPC) in the first quarter of 2021 was 1.25%, with it accumulated over the last 12 months at 15%.
This difference in inflation calculations by income level is due to families with lower purchasing power spending larger proportions of their income on basic products such as food, housing and transport. This is related to the fact that we have an INPC higher than the IPCA in the 12-month period, and lower for the first quarter of 2021.
The explanation for this discrepancy involves a slowdown in the increase in food prices this year, something expected in the first quarters. But why then are people still so concerned about the price of food?
It is because we continue to be impacted by the large rise in these prices last year, caused by the devaluation of the real against the dollar - which increases exports of Brazilian commodities, reducing domestic supply - in addition to a decrease in activities in the domestic and external sources - due to health restrictions that reduced their supply - and emergency aid, which gave a boost to the purchasing power of people economically affected by the pandemic and caused an increase in demand in the economy.
Finally, considering an example I heard last week in which a person noticed an increase in the prices of soybean oil and pasta, mainly due to an increase in exports of soybeans and wheat, inputs for the production of the products in question. Soybean prices rose around 80% in 2020, while wheat rose around 40%. In the first quarter of 2021, soybeans increased by around 13% and wheat by 5%.
Another important food that has a huge impact on Brazilians’ food basket is meat. Beef prices grew by around 25% in 2020 and in the first three months of 2021 they increased by around 10%. For China alone, beef exports in March 2021 grew 8% compared to the amount exported in March 2020, for example.
And of course, we could not fail to mention the – considered by many – essential food on the Brazilian table: rice. Our favorite experienced a growth of around 110% in its prices in 2020, while in the first quarter of 2021 there was a drop of close to 7%. It is important to highlight that the considerations made about soy, wheat, beef and rice refer to the prices of these products as basic inputs, not those found on retail shelves.
For the other three quarters of 2021, we need to wait for the next chapters of this plot. The new emergency aid, even though it is smaller, will put pressure on inflation in the coming months, albeit to a lesser extent, just as it itself will be lower than the emergency aid granted in 2020. With the recovery of the economy, after a drastic reduction in contagions from Covid-19, we will have an increase in supply, in order to converge towards a balance between supply and demand. An important point, which should never be overlooked when we talk about macroeconomic conditions, is the approval of the so-called structural reforms that will make the Brazilian economy more productive and, consequently, we will have the real less devalued, causing us to have a decrease in inflation. foods.
