“Our money is worth a lot less. We have less fuel by paying more”
Pedro Henrique dos Santos Sousa, administrative assistant
In their ventilated offices, as infectologists recommend, or in isolation with technology to keep up with the profitability of their clients’ investments, bank and brokerage analysts have been prudent enough to downgrade their projections. growth of the Brazilian economy and raise the estimates of inflation of 2021. Without the same condition, families try to cut expenses to face a new wave of price increases that made March end with the biggest increase in the cost of living for that month since 2015 in the Metropolitan Region of Belo Horizonte, as in the average of Brazil.
Transported to headlines and political discourse, fuels represent only the most visible part of the 1.09% inflation measured in March in Grande BH by the Extended National Consumer Price Index – 15 (HICP-15), prior to the official inflation of the country, the IPCA, of the Brazilian Institute of Geography and Statistics (IBGE). In 6 years, it was the highest variation for March. In the historical series of the indicator, the cost of living rose slightly more in March 2015 (1.16%).
Compared to the change of 0.23% in March 2020, when Minas Gerais registered the first case of contamination by coronavirus, last month’s IPCA-15 was 4.7 times higher. Of the nine groups of products and services surveyed by IBGE in the composition of the index, five had price adjustments. It means that there was a company for gasoline, ethanol and diesel in the markings. They ranged from spending on transportation apps to spending on health, cooking gas, rents, energy, some clothes, cuts of meat and vegetables. In the Brazilian average, the IPCA-15 rose 0.93%.
All this chain pressure should be reflected in the IPCA released by IBGE this Friday. It is difficult to imagine that prices will drop, at least, in April, although there has been relief in general spending on food, for example, as the economist Fábio Bentes, who monitors the economic indicators at the National Confederation of Trade in Goods, Services, and Tourism (CNC). “If there were reductions in fuel prices at refineries, we could have lower inflation, but the reductions take time to reach the consumer and the exchange rate devaluation (of the real against the dollar) also affects prices very much,” he says.
Along with the policy of alignment with oil prices in the international market, which implies Petrobras adjustments, fuels, as well as products exported and imported by the country, are influenced by the exchange rate. When they become more expensive, fuels have a great capacity to contaminate a series of prices in other sectors, increasing the freight of goods.
However, in times of low prices at refineries, the drop does not always reach retailers, and sometimes, not even part of it reaches the pumps at dealer stations. The 5.08% readjustment in the group of transportation expenses in Grande BH, in March, reflected intense variations in ethanol (20.58%), diesel oil (13.14%), gasoline (12.66%), insurance voluntary vehicle (6.39%) and transportation by application (5.73%). Before the two reductions in gasoline prices at the refineries that Petrobras announced in the second half of last month, fuel had been rising for nine months.
Outside the field of influence of so-called government-administered prices, which include energy, March inflation was also pressured by the readjustment of 0.69% in health plans and 1.38% in laboratory tests. The IPCA-15 did not rise further in Grande BH because it was contained by the drop in the average price readjustments for food and beverage groups (-0.43%), communication (-0.11%) and personal expenses (-0.03%). Still, there are meats with rising prices, like the duckling; fruits, such as mango; other proteins, such as chicken eggs (7.06%), and vegetables, such as lettuce (4.78%).
The advancement of COVID-19, on the other hand, weakens the economy, makes the country’s scenario foggy in the coming months, and will have implications for the direction of prices, as highlighted by Thaize Martins, research coordinator at the Ipead Foundation, linked to UFMG, responsible for calculating the Broad Consumer Price Index (IPCA) in the capital. “The trend for the coming months will depend a lot on how the economy will turn in the face of these other situations imposed by the pandemic,” he says.
While the economy loses pace due to the effects of the worsening of the contamination and deaths caused by the coronavirus – two of them are the maintenance of high unemployment and the fall in income -, the control of inflation tends to demand measures of monetary tightening and the main instrument is the the increase in the basic interest rate, the Selic, the rate that remunerates government bonds in the financial market and serves as a reference for operations in banks and commerce.
It also presupposes adjustment in public accounts at a time when government spending is difficult to contain with the need to fight the pandemic. Economist Fábio Bentes recalls that along with high unemployment in the country, data from the Central Bank indicate that 30% of household income is committed to paying debts, the highest level since 2005, which makes recovery of the economy more difficult.
This delicate and complex scenario led the Institute for Applied Economic Research (Ipea) to reduce, last week, its projection of economic growth in 2021 from 4% to 3%. The forecast for the country’s official inflation went from 3.70% to 4.60%. The latest survey of a hundred economists interviewed by the Central Bank for the Focus Bulletin released last week showed an increase in the inflation forecast to 4.81% this year and a drop to 3.81% of the estimated growth rate of the economy in 2021 .
The economic crisis itself must take care of containing the strength of some readjustments that families faced in March, such as clothing and health services, in the evaluation of economist Fábio Bentes, from CNC. Items that became more expensive, such as women’s clothing (4.72%), last month are the result of specific markdowns, according to Bentes.
Inflation for the clothing expenses group reached 0.4% on average per year, the lowest since 1999. In the case of health expenses, the economist expects price accommodation, with the exception of the readjustments that were already expected in health plans, with the loss of space for markdowns.
Bicycle and research against readjustments
With little room for maneuver in the budget, the consumer’s solution to circumvent high prices is to refrain from consumption or set a strict spending target, combined with a good search of offers. Administrative assistant Pedro Henrique dos Santos Sousa, 25, took a radical step against the increase in gasoline expenses and has already used the bicycle to go from home to the company he works for.
“I only get out of the car in case of extreme need, when I need to go somewhere urgently. Even an Uber we try not to have to go to the pump (gas station) and pay. Our money is worth a lot less. We have a lot less fuel paying a lot more. This is our main form of transportation and we end up being held hostage by these increases ”, he complains.
When doing the math, Pedro Henrique Santos realized that with the disbursement of R $ 30, for example, he puts 8 liters of gasoline in the car tank, when last year, before the coronavirus pandemic, the same amount was enough to acquire up to 12 liters of fuel. “The impact is direct and dry in our pocket. With the increases, I end up opting for other types of transport. I even went to work by bicycle. Some destinations that I used to do by car I started to do by bus ”, he says.
Outraged by the price markings in supermarkets, housewife Lídia Aparecida de Carvalho, 57, does not shop anymore without first researching prices for the best offer. “It is amazing how expensive things are. It was absurd. Today, I go to the supermarket and pay a fee, when I go the next month it is double. See that I avoid buying nonsense. I buy more of the essentials. Unfortunately, a good purchase of the month does not come out for less than R $ 300 ”, he says.
With the price survey, the housewife achieves some savings and reduces the impact of high inflation on family expenses. For Lídia Carvalho, the pandemic was the main cause of the surge in food inflation last year. “Before the pandemic it was possible to pay, but now it is inhumane. I already bought a packet of rice for R $ 30. You leave with three bags from the supermarket, paying R $ 100 to R $ 150. ”
The third preview of March inflation measured in Belo Horizonte by the Broad Consumer Price Index (IPCA), of the Ipead Foundation, reached 1.14%. In February, the indicator rose 0.32%. Among the five products or services that most contributed to the increase in the cost of living, were gasoline, with a readjustment of 13.10%, new car (3.50%) and residential condominium (1.42%). In the accumulated period of the last 12 months until the third week of March, the IPCA has already accumulated 6.40%. To give you an idea of what this rate means, the center of the official 2021 inflation target is 3.75%, with a tolerance margin of 1.5 points up or down.
The research coordinator of the Ipead Foundation, Thaize Martins, notes that some foods have shown price reductions, which did not happen with the so-called administered prices, those of public services, including electricity. “We have some products that have an off-season period (when supply falls and prices tend to rise), but as for the interference of inflation, we are seeing more weight in administered products than in food products at this time.”
* Intern under supervision of sub-editor Marta Vieira
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