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Brazil Comes Out of Pandemic

Brazil is the most recent country to escape from the throes of the pandemic, only to face the greatest inflation rate in years.
Prices grew at the quickest monthly rate since 1994 in September, with the 12-month number reaching 10.25 percent, returning Brazil to double-digit inflation for the first time in more than five years.
Countries ranging from the United Kingdom and Canada to Indonesia and other sections of the developing world have faced with rising consumer prices as life returns to normal following Covid-19 outbreaks. As businesses reopen and more people begin to travel and spend again following widespread immunisation programmes, energy prices have skyrocketed and supply bottlenecks have pushed inflation higher.

Brazil’s rising costs serve as a signal to Latin America that the region’s relative success in vaccinating large segments of its people may be rewarded with an inflation shock, according to economists.
“Almost every country in Latin America has seen a big boost in economic activity,” said Goldman Sachs analyst Alberto Ramos. “Because of the high degree of immunity, life can return to normalcy, putting pressure on costs that were suppressed during the pandemic, particularly services.”

As worldwide supplies of Covid-19 injections become more readily available, governments in the region have been able to quickly immunise their populace due to high vaccine acceptability.

According to Our World in Data, over 72 percent of Brazilians have now received at least one vaccine dosage, which is more than the 64 percent in the United States.

Consumer prices in Mexico, Chile, Colombia, and Peru have risen in the last month, setting the path for further interest rate hikes across the region. In Chile, 12-month inflation reached 5.3 percent in September, while in Mexico, it is above target at 6 percent. Last month, Colombia’s 12-month rate increased to 4.51 percent.

Local circumstances have exacerbated Brazil’s inflation troubles, which have been especially severe on the poor, who have also suffered from growing unemployment throughout the pandemic.
In Brazil, whose older generations are still plagued by the memories of punishing hyperinflation in the 1980s and 1990s, inflation has broader political ramifications. According to political scientists, rising costs indicate that many poorer voters who supported President Jair Bolsonaro in the 2018 election may place their trust in a socialist leader, former President Luiz Inácio Lula da Silva, to improve their situation.

A catastrophic drought, the worst in nearly a century, has caused hydroelectric reservoirs to dry up, forcing the government to resort to more expensive thermal facilities. Hydropower today accounts for almost 70% of total power generation.
Electricity prices increased 6.47 percent from August to September, and are up over 30 percent year on year. With cooking gas prices rising by roughly 35% year on year due to higher worldwide gas prices, many impoverished Brazilian families have resorted to cooking their meals over open fires, risking accidents and lung problems.
The drought has also affected crops and cattle feed, driving up the price of meat by about 25% in the last year, as well as the price of rice, a mainstay for Brazilians.

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