Inflation: evaluate in graphs the rise in costs in Brazil and in 5 Latin American international locations

The prices of essential items were already on an upward trajectory due to the effects caused by the covid-19 pandemic. But the war in Ukraine has worsened the situation: the beginning of the armed conflict in late February generated an energy and food crisis.

More than six months have passed, central banks have been forced to raise interest rates to try to control the inflationary spiral, and the cost of living has reached record levels not seen in decades.

To get an idea of ​​the impact on people’s pockets, a basic basket of goods and services is used that each country produces according to household consumption.

This basket includes hundreds of products and services ranging from health, rent or education expenses to the price of fuel and food.

In the 6 largest economies in Latin America, 12-month inflation (in the comparison between July 2021 and July 2022) reached 71% in Argentina, 10% in Brazil, 13.1% in Chile, 10.2% in Colombia, 8.1% in Mexico and 5.6% in Peru.

With the idea of ​​simplifying the comparison between countries, BBC News Mundo, the BBC’s Spanish service, chose eight basic mass consumption products to measure the impact of inflation on some essential items.

Cooking oil has been one of the products with the highest price increase in international markets.

In addition to the decrease in supply due to droughts and increased consumption after the pandemic, the war in Ukraine has caused the price of the product to hit all-time highs.

As Ukrainians and Russians are the world’s biggest exporters of sunflower oil, the shortage in exports has led to price spikes.

Another complicating factor was the high demand for vegetable oils for use in the biofuels industry, further reducing the supply of the product.

2-Flour

The rise in wheat flour has dragged the price of bread with it, while the rise in corn flour has driven up the value of products like tortillas and arepas, which are very popular in countries like Mexico and Colombia.

Again, the war had a profound impact on this segment. Ukraine produces 16% of the corn and 9% of the wheat in the world.

Added to this was the fact that wheat shipments from Russia — the world’s largest exporter — had fallen.

In addition to being used as a base for the main flour in some countries, corn is an important and required input in raising poultry for slaughter, which puts pressure on the price.

3-Milk

With the increase in production costs, dairy products suffered huge price increases.

In some countries, climatic conditions have made raising livestock more expensive and, in the midst of the inflationary wave sweeping the world, the entire production chain has been affected: from the fertilizers needed to feed the animals, to the cost of fuel for transport. The milk.

Many producers have preferred to dispose of part of the herd, selling the least productive cows to slaughterhouses.

The high price of milk in countries like Brazil (66% in the last year) has generated a whole market of products that pretend to be dairy, but are actually made with whey, starch and chemical additives, cheaper ingredients with low nutrient density.

4-Beef

Faced with the increase in beef prices, many families sought other proteins or, in the case of the most vulnerable, were left without them.

The variation in prices depends, among other factors, on whether the country is a producer or importer of beef (Brazil directs 65% of its production to the domestic market, for example), on how the different parts of the production chain impact the final cost. or if there is some kind of price control.

In countries like Argentina, Colombia and Chile, consumers registered increases in 12 months of 61.7%, 27.1% and 26.3%, respectively, in July.

5-Gasoline

In the months following the war, the price of oil and gasoline reached historically high levels amid international uncertainty caused by the conflict.

Although more recently prices have slowed the rise, the cost to households remains high.

To mitigate the effects of the rising cost of gasoline and diesel, governments intervene through mechanisms such as direct subsidies, tax reductions or price management through state-owned companies.

Chile, Colombia and Peru have a price stabilization fund that seeks to smooth out fluctuations.

Brazil influences prices through tax breaks, Argentina through indirect taxes and price freezes, and Mexico through direct subsidies.

6-Sugar

The price of sugar has slowed its rise in the last five months, although it still represents a burden for many families in Latin America.

Last year, Argentina registered an increase of 136% and Peru, of 43.6%.

In Brazil, the world’s largest producer of sugarcane, accounting for more than 30% of the global market, the item had an outstanding increase last year due to the lack of rain.

In Latin America, other prominent producers are Mexico and Colombia.

7-Chicken

The increase in the value of chicken feed has been one of the determining factors for the increase in the product. Poultry food (especially corn and soy) accounts for about 70% of the poultry production chain.

The exchange of beef, also inflated, for chicken also represented an element of pressure.

Grains are some of the products whose value has suffered one of the biggest increases due to the war in Ukraine, a country that became known as “the breadbasket of Europe”.

8-Egg

Severe outbreaks of bird flu in the United States and France have reduced world egg supplies, while the war in Ukraine has disrupted exports to Europe and the Middle East.

The value of the product was also influenced by the scarcity of fertilizers (used to plant the grains that serve as feed for the birds) and the high price of fuel.

And to this is added the situation of local markets. In Peru, for example, the increase in the cost of the product would have been driven by the fall in the national production of durum maize, the main food for chickens.

The rise in the price of eggs is hitting the most vulnerable families who rely on eggs as a meat substitute and sole source of low-cost protein the hardest.

Source: BBC News Brazil