What could you buy with R$100 10 years ago? – Behavior – Estadão E-Investidor – The main financial market news

  • The Broad Consumer Price Index (IPCA), which measures official inflation in Brazil, varied by 83.31% between 2012 and 2022. In practice, however, the high inflation felt by citizens can be greater
  • 10 years ago, with R$100 it was possible to fill the car with 36 liters of gasoline or buy 2.4 cylinders of gas weighing 13 kilos. Now, with the same value, it is possible to pay only 13 liters of fuel or 0.8 cylinders

Whoever entered with R$ 100 in his pocket in a butcher shop in 2012 managed to leave with 6.6 kilos of beef in his bag. Ten years later, the same amount buys just 2.3 kilos, an amount almost three times smaller. This price increase have a name that many Brazilians know and still fear: inflation.

“Inflation is more than a general price indexis also a wage degradation index”, explains Itamir Caciatori Junior, PhD in Administration and professor of Finance at the Business School of Universidade Positivo (UP).

Until the creation of the Real Plan, in 1994, Brazil lived with a scenario of lack of control, with a monthly inflation rate of 40% per month. The constant price increase has been dubbed the “inflation dragon”. The new currency came about to bring the price rally within acceptable levels.

Inflation versus purchasing power

THE Extended Consumer Price Index (IPCA) accumulated from April 2012 to March 2022 was 83.31%while the minimum wage went from R$622 to R$1,212, a variation of 94.85%.

Looking only at these numbers, it may seem that the situation has improved for consumers in the period; however, the Inflation is felt differently by the workeraccording to the professor: “Salary readjustments are, as a rule, annual, while the prices of goods rise at a greater frequency”. In this way, income rises after the price increase has already occurred.

In addition worker’s income measured by the Brazilian Institute of Geography and Statistics (IBGE), which also considers the informal market responsible for 40% of the employed population, is at the lowest level since 2012. The average real income of Brazilians was R$ 2,447 in 2021, compared to to R$2,516 ten years ago.

Price increase in 10 years

A grocery shopping list can illustrate how inflation has directly hit consumers’ pockets over the past ten years. photo: Shutterstock

The main products that impact the rise of inflation are gasoline, gas cylinders and electricity, which generate ripple effect throughout the production chain of the economy.

In 2012, a liter of gasoline cost R$2.74 and a 13-kilogram bottle of gas cost R$41.38. Today, these products cost R$7.53 and R$113.63, respectively, on average. That means there was almost threefold price increase in 10 years.

A grocery shopping list can illustrate how inflation directly hit the pockets of consumers in the last ten years. The following table shows what it was possible to buy in 2012 and 2022 with R$100, adding up all products and excluding the inflation adjustment.

Item 2012 2022
Beef 1 kg 300g
Chicken 3kg 2kg
Milk 6 liters 2 liters
Bean 2kg 1 kg
Rice 5kg 2kg
Flour 5kg 2kg
Potato 1.5kg 1 kg
Tomato 1 kg 400g
french bread 1 kg 500g
Coffee shop 1 kg 500g
Sugar 1 kg 240g

Some items have great seasonal variation, such as potatoes and tomatoes; however, most of the related goods have seen price increases and are unlikely to go lower, says Caciatori Junior. Items such as oil and beef, which are consumed daily, suffered increases above the minimum wage and inflation for the period.

Item 2012 2022 Variation
Potato (kg) BRL 1.51 BRL 7.18 374.02%
Oil (900 ml) BRL 3.13 BRL 9.62 207.39%
Beef (kg) BRL 15.05 BRL 43.68 190.35%
Milk (liter) BRL 1.76 BRL 4.32 145.97%
Sugar (kg) BRL 1.70 BRL 4.18 145.81%
Chicken (kg) BRL 4.68 BRL 10.55 125.25%
Rice (kg) BRL 2 BRL 4.27 113.66%
Flour (kg) BRL 2 BRL 4.20 110.16%
Beans (kg) BRL 4.54 BRL 8.46 86.32%
French bread (kg) BRL 8.75 BRL 16.25 85.87%
Tomato (kg) BRL 5.49 BRL 9.20 67.58%
Coffee (kg) BRL 13.54 BRL 17.63 30.18%

Will the inflation dragon return?

In recent months, the IPCA has shown a frightening acceleration. In March, for example, the rate increased 1.62%, in biggest change for the month since the stabilization of the economy Brazilian, and had increase of 11.3% accumulated in the last 12 months.

However, the inflationary dragon shall not return — at least not as strong as before. “Compared to the 1980s, there is a big difference in monetary policy”, comments Caciatori Junior. Brazil works with inflation targeting regimea commitment established by the Central Bank to give stability to the economy.