Unemployment Doubles, and Inflation for the Poor Soars 40%

A combination of rising food prices and greater unemployment flattens purchasing power and increases poverty

São Paulo

During the coronavirus pandemic, the poorest of the Brazilian population has faced a crushing weakening of purchasing power.

Food inflation, the main group of products consumed by this stratum, rose by almost 40% – half of that in the last 12 months, when official indices advanced 10%. Unemployment grew by 8.5 percentage points, after a 21% jump from 2014 to 2019.

The result of this combination is the increase in hunger and poverty in the country.

For prices to stagnate or fall, experts expect a greater drop in economic activity and employment, repeating what happened from 2015 to 2019, when consumer inflation (IPCA) dropped from 10.7% to 4.3%. GDP sank 7.2%, and the benchmark interest rate nearly doubled in two years.

This combination has led to a Brazil that is weaker and poorer than in 2015.

According to Datafolha, 57% of families spend the month with less than R$ 2,200. But income is much lower for the really poor: 27.4 million Brazilians (13% of the total) now live on less than R$261 a month, points out FGV Social. It's the highest extreme poverty rate in a decade.

Translated by Kiratiana Freelon

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