By Jaylan Boyle, Senior Contributing Editor
RIO DE JANIERO, BRAZIL – Those living in the Cidade Maravilhosa will have noticed the Brazilian Reais (Real) not going as far they used to, beyond the soaring value against the U.S. Dollar. In fact, inflation has risen by it’s highest degree in five years, to 0.83 percent in November, as published by the IBGE (Brazilian Geographic Statistics Institute).
Amid concerns of an overheating economy, some analysts are voicing concern about the decreased consumer buying power. Looking back over the last 12 months, the Banco Central’s December 1 breakdown of the Consumer Price Index displays net increase across all monitored product categories.
The food and beverages category experienced an overall climb in price of 6.58 percent, and the IGBE’s figures told the same story, food having experienced in it’s measurements an inflationary increase of 2.2 percent over the course of November alone.
Eulina Nunes dos Santos, IBGE prices department coordinator, said recently “There has been a confluence of strong overseas demand and from the domestic market, basically because of greater purchasing power from consumers”. She continues to illustrate, “Meats soared 10.7 percent in November, which represents 30 percent of the overall monthly index”.
Economist Silvio Campos Neto from Banco Schahin said however while there is increased pressure on the price of goods such as meat and sugar, other staples such as rice, beans, and cereals were, relatively speaking, under control and stable.
This recent surge in the cost of goods runs parallel to a dramatic increase in the cost of bricks and mortar, for which some are concerned could prove to be a bubble in Real Estate, with an inevitable burst. This is to be expected perhaps, in view of the approaching FIFA 2014 World Cup and 2016 Olympics, as landlords look to increase rents and vendors bump up prices in order to cash in on the expected influx of investment.
Julia, an foreigner living in Rio working in education offers: “Recently I was ready to buy (and) I found it completely impossible to find anything in my price range. Last year I know I would have been able to find something affordable in Copacabana, but I’ve noticed a leap of about 50 percent in house prices in that area.”
There is better news for the cellphone user and internet surfer though, as the cost of communications has increased only marginally over the last year by 0.39 percent, according to the Banco Central. Commuters will also be heartened by a similarly small price increase of 1.98 percent in transportation.
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