Food prices leave Brazilians feeling poorer despite economic gains

Brazilian grocery bills have risen far faster than overall inflation since the pandemic, helping explain why many consumers remain dissatisfied with the economy despite record employment and income levels. Food-at-home prices climbed 60.8% between April 2020 and August 2026, compared with a 42.7% increase in Brazil’s benchmark consumer price index over the same period.

Most of the increase occurred through mid-2022, amid disruptions and shifts in global supply chains. Between April 2020 and the end of 2022, food-at-home prices rose 42.4%, compared with a 21% increase in overall consumer prices. From January 2023 through August 2026, food-at-home prices rose 12.9%, while overall inflation was 17.9%. Fabio Romão, an economist at 4intelligence, made the calculations.

Workers’ average earnings rose 9.5% in real terms, after adjusting for inflation, between April 2020 and July 2026.

Experts say that this important component of household budgets has become more expensive than overall inflation, one of several factors that help explain Brazilians’ discomfort with the economy, even as macroeconomic indicators paint a more positive picture, with employment and income at record levels.

The negative perception reflects a combination of factors. One is economic growth from a depressed base following the 2015 and 2016 recession; income gains that remain insufficient to provide what many consider a decent standard of living; and job creation concentrated in lower-paying positions.

Other factors include a shrinking wage premium for workers who have completed high school or college and rising consumer aspirations in the age of social media.

The cost of living, purchasing power and the resulting economic unease—reflected in opinion polls and studied in academic research—have become prominent issues in this year’s presidential election. President Lula and Senator Flávio Bolsonaro, who will face each other in the runoff, have traded accusations and sought to appeal to voters’ concerns over the economy.

Ahead of the first round, Lula acknowledged the problem. “I know things still aren’t good enough. But I will make sure inflation remains under control. You will no longer pay the tax on low-cost overseas purchases, the minimum wage will continue to rise above inflation, and we will invest to create quality jobs with better wages,” he said.

“Grocery shopping today is much more expensive than it was before the pandemic. There has been a shift to a higher price level: eating has become more expensive, and short-term relief has done little to help. Food costs are part of the explanation for people’s dissatisfaction,” Romão said.

The economist’s calculations show that price increases were concentrated in the period immediately following the pandemic, both for overall inflation and food consumed at home. More recently, the war between Iran and the United States and the effects of El Niño have begun to weigh more heavily.

The higher cost of living is a global trend that has also fueled dissatisfaction in other countries, according to Laura Carvalho, an economics professor at the University of São Paulo and researcher at the Getulio Vargas Foundation’s Brazilian Institute of Economics (FGV Ibre).

The backdrop includes successive inflation shocks stemming from the pandemic, the start of the war in Ukraine in 2022 and, this year, the war in Iran. Surveys around the world point to the cost of living as the main reason for people’s negative perceptions of the economy, Carvalho said.

In the United States, the term “vibecession” was coined in 2022 to describe a similar disconnect between economic indicators and persistently negative public perceptions of the economy. The term combines “vibe” and “recession.”

“There is an additional issue: price increases are perceived as the government’s fault, regardless of where the shock comes from, while income gains are seen as the result of personal merit. That creates an asymmetry that lies at the heart of the economic malaise,” Laura Carvalho said.

An August Quaest presidential voting-intention poll—the most recent edition to include a section devoted exclusively to the economy—found that 33% of respondents believed their income had risen at about the same pace as the cost of living. Another 32% said they had not seen their income increase, while 23% believed the cost of living had risen more than their income.

Another factor in understanding dissatisfaction with the economy, researchers say, is a sense that incomes remain insufficient when measured against what people consider a decent standard of living and the ability to meet basic needs. Gross domestic product has grown in recent years as the economy recovered from the pandemic, but that followed six years of either contraction or weak growth from 2014 through 2019.

“There is this idea that income is insufficient. The question is to what extent income growth is actually translating into better living conditions and higher consumption levels, or whether it is still not enough,” said Vitor Hugo Neia, executive director of the Volkswagen Group Foundation.

A recent survey the foundation conducted with the Sustainable Cities Institute and Ipsos-Ipec in 10 Brazilian state capitals found that only 18% of respondents said their personal income had increased over the previous 12 months. Another 45% said it had remained stable, while 31% said it had declined. In addition, 61% took on extra work to supplement their income, and 41% cut back on meat consumption.

“More than income itself, what ultimately matters is purchasing power. When people say their salary doesn’t last until the end of the month, it isn’t only about prices. The income gains we’ve seen still haven’t brought a large share of Brazilians to what they consider a decent standard of living,” Carvalho said.

Among employed workers in Brazil, 32.2% earn no more than one minimum wage a month, according to second-quarter data from Brazil’s statistics agency IBGE. The share earning up to two minimum wages is nearly 70%, at 69.1%. That means only 30.9% of employed Brazilians earn more than R$3,242 a month.

Another factor cited by experts to explain the disconnect between public sentiment and Brazil’s economic indicators is a shift in expectations, influenced in part by social media.

“There has been an important change over the past 20 years in how people measure quality of life. In the past, people wanted a stable job and a family structured in a certain way, but that has changed,” said Igor Pantoja, institutional relations coordinator at the Sustainable Cities Institute.

“Today, a good quality of life is closely associated with consumption. There really is a mismatch between what the political system and institutions seek to provide and what people demand, often based on what they see on the internet and social media,” he said.

Carvalho also sees social media as amplifying consumer aspirations, although she considers its influence secondary to other explanations for the gap between perceptions and economic indicators.

“People’s aspirations aren’t the same as they were in the 2000s. It’s no longer about buying a refrigerator or flying on a plane for the first time. It is also natural that as a society develops, people begin to demand new things. And those demands are amplified by social media, where everyone shares their lives,” she said.

The survey by the Volkswagen Group Foundation, Sustainable Cities Institute and Ipsos-Ipec also provides a longer-term view of how people perceive changes in living standards, with a focus on social mobility.

Overall, 73% of respondents in the 10 state capitals said they had more education than their parents. Only 43%, however, said their income was higher than their parents’, while 51% believed they had better housing conditions.

“People recognize that they are more educated than their parents. But that educational mobility isn’t reflected to the same degree in income and housing mobility. It’s not that education isn’t important, but there is a sense that qualifications alone are not enough,” Neia said.

*By Lucianne Carneiro — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/