Food price relief will not come until 2023

The war between Russia and Ukraine, which boosted international prices for fuel Fertilizers will maintain food price inflation in Brazil until at least 2023 UOL It stipulated that food easing, with increases smaller than those seen during the pandemic, should only occur in the next year, if no new shocks (unexpected events) on inflation emerged.

In the month of March alone, food prices rose 3.09%, according to the IBGE (Brazilian Institute of Geography and Statistics), while food prices rose 3.09%. Overall inflation was 1.62%.

In the financial market, projections indicate that the cost of food at home – which includes the different categories of products consumed by families, from rice and beans to meat – will rise by 8.65% in 2022. The percentage is included in the forecast system of the central bank.

However, as the system was last updated on March 25, due to Civil servants strike BC, the currently expected percentage may be higher. Experts who heard the report said food inflation tends to stay near 10% this year.

Economist Guilherme Moreira, IPC (Consumer Price Index) Coordinator at Fipe (Fundação Instituto de Pesquisas Econômicas), is drawing attention to the price hikes since the start of the covid-19 pandemic in 2020.

The food group will contribute the largest amount to general inflation this year. I don’t see any short-term relief. We expect food products to rise 1% per month, and at that rate, I wouldn’t be surprised if group inflation is above 9% for the year, to come close to 10%. Moreover, with an accumulation of almost 30%, we are talking, in three years, about a food price inflation of 40%. It will become a serious social problem.
Guilherme Moreira, IPC Coordinator at Fipe

pressure 2022

Below is the data on household food inflation that has accumulated in recent years, according to the IPCA (National Broad Consumer Price Index), as measured by the IBGE. IPCA is the official price index. In addition, there is a forecast for food at home in the next two years, given the BC forecast system.

Inflation and Accumulated Expectations – Food at Home

• 2018: +4.5% (IBGE)
• 2019: +7.8% (IBGE)
• 2020: +18.2% (IBGE)
• 2021: +8.2% (IBGE)
• 2022: +8.65% (drop)
• 2023: +3.65% (expected)

From 2020 to 2022 (since the start of the pandemic), the cumulative rise should come to 39% by forecast – close to the 40% in the three years mentioned by Moreira, of Vibe.

IBGE data also shows that in recent months, food items have risen more than average.

Inflation in recent months

• October 2021: +1.25% (IPCA); + 1.32% (food)
• November 2021: +0.95% (IPCA); + 0.04% (food)
• December 2021: +0.73% (IPCA); + 0.79% (food)
• January 2022: +0.54% (IPCA); 1.44% (food)
• February 2022: +1.01% (IPCA); + 1.65% (food)
• March 2022: +1.62% (IPCA); + 3.09% (food)

Why is food so expensive?

Economist André Braz, Coordinator of Price Indicators at FGV Ibre (Brazilian Institute of Economics at Fundação Getulio Vargas), says that the recent rise in food prices is largely related to The war between Russia and Ukraine.

This is because The conflict led to a rise in commodity prices Important for Brazil, such as soybeans, wheat and corn.

Many of the foods we consume are industrial products derived from these grains. Soybean oil is on the rise, and so is margarine. Given the importance of Russia and Ukraine in the wheat market, the price rises and pollutes the entire chain: French bread, crackers, pasta, wheat flour. These are basic foods.
Andre Braz, Economist at FGV Ibre

Braz also remembers that the increase in atom ends up affecting meat prices. Cereals are an important input to chicken production, for example. “When you think about the effect of these grains on proteins, which is meat, we see that the food group is under a lot of pressure,” he says.

The latest IPCA data, released on Friday (8), proves this:

Inflation of selected food prices in March

• Soybean oil: +8.99% (March); + 23.75% (cumulative over 12 months)
• Margarine: + 0.75% (March); + 20.09% (accumulated)
• Whole chicken: +0.54% (March); + 16.11% (Accumulated)
• French bread: +2.97% (March); + 8.81% (Accumulated)
• Biscuits: +2.33% (March); + 13.01% (Accumulated)
• Noodles: +2.69% (March); + 13.42% (Accumulated)
• wheat flour: + 4.03% (March); + 18.02% (Accumulated)

Of note is the case of soybean oil – largely consumed by Brazilian families – which became nearly 9% more expensive in the month of March alone.

Another factor putting pressure on food prices is the rise in oil on the international market, which boosts the fuel in Brazil. The Diesel fuel advances already affect the freight rate —A big cost to supermarkets. In many cases, transfer to the final consumer is inevitable.

Vegetables and vegetables, for example, were 9% more expensive in March. This is related to the harvest, but also to the increase in transportation costs. In 12 months the cumulative increase was 33.29%.

Low income suffer more

Higher food prices affect all social classes, but the impact is greater on the lower income budget.

Monthly, Fipe publishes IPC FX (Consumer Price Index by Income Range), which is measured in the city of São Paulo.

The latest data from the foundation shows that in March, food price inflation was 2.02% for families in São Paulo earning more than 8 minimum wages (more than R$9,696 per month). For families with salaries between 1 and 3 (between R$1,1212 and R$3,636), the rate was 2.66%. In the middle range, between 3 and 8 minimum wages (3,636 R$ to 9,696 R$), food inflation was 2.32%.

“Rice, beans, baguettes and soy oil are products that have more weight for the lower-income group. These items have gone up a lot,” explains Guilherme Moreira, of Fipe.

This was not enough to counteract the high rates of inflation, lower incomes were also affected because food has more weight in the overall budget. The share of food in spending from 1 to 3 of the minimum wage is 28.8%. As for families with more than 8 salaries, the percentage is 17.6%.

“In low-income families, housing and food are very important,” Moreira says. “Those in the high-income bracket can make changes or reduce other expenses. It is possible, for example, to drive fewer cars, if gasoline is more expensive. But what tools do lower-income families have?”

Moreira draws attention to the fact that the poorest families have been under stress since the beginning of the pandemic. “It was precisely these families that lost the most purchasing power in recent years.”

Data from Dieese (Department of Statistics and Joint Social and Economic Studies) show that in 2021, 47% of categories of workers have salary adjustments below inflation. In 2018, before the pandemic, it was 9%.

For a large part of the population, this is the worst of the world: high inflation, with lower incomes.

Relief only in 2023

Responsible for controlling inflation in Brazil, the Central Bank has raised the key interest rate (Selic) to contain price hikes. Today, Selic’s rate is 11.75% annually, but the foundation has already indicated that it should promote a new increase in May, to 12.75%.

British Columbia President Roberto Campos Neto said in recent statements that Peak inflation should occur in April. The predictions are that in 2023, the price increases will be lower.

For Guilherme Moreira, from Phoebe, absorbing inflation next year is actually the most likely scenario. He added, “We have reached a situation where the purchasing power of the population is greatly compressed and this demand [por produtos] “We’re getting to a price point,” he says.

Braz, of the FGV, recalls that the 2023 perspective is to resolve the war between Russia and Ukraine, which could ease pressure on goods and fuel. “In addition, the side effect of high silicosis is that Brazil grows less. There is less employment and income generation. Therefore, the family consumes less.”

wanted by UOLThe central bank declined to comment on the recent rise in food price inflation or inflation in general.