$30/pizza: Brazil’s inflation woes

Shoppers here with a notion of what items cost abroad need to brace themselves when buying a Samsung Galaxy S4 phone: the same model that costs $615 in the United States is nearly double that in Brazil. Simon Romero writes for the New York Times.

Shoppers here with a notion of what items cost abroad need to brace themselves when buying a Samsung Galaxy S4 phone: the same model that costs $615 in the United States is nearly double that in Brazil. An even bigger shock awaits parents needing a crib: the cheapest one costs over $440, more than six times the price of a similarly made item at Ikea in the United States.

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For Brazilians seething with resentment over wasteful spending by the country’s political elite, the high prices they must pay for about everything - a large cheese pizza can cost almost $30 - only fuel their ire.

“People get angry because we know there are ways to get things cheaper; we see it elsewhere, so we know there must be something wrong here,” said Luana Medeiros, 28, who works in the Education Ministry.

Brazil’s street protests grew out of a popular campaign against bus fare increases. Residents of São Paulo and Rio de Janeiro spend a much larger share of their salaries to ride the bus than residents of New York or Paris. Yet the price of transportation is just one example of the struggles many Brazilians face in making ends meet, economists say.

Inflation stands at about 6.4 percent, with many in the middle class complaining that they are bearing the brunt of price increases. Limiting the authorities’ maneuvering room, the popular indignation is festering at a time when huge stimulus projects are failing to lift the economy from a slowdown, raising the specter of stagflation in Latin America’s largest economy.

But economists say much of the blame for the stunningly high prices can be placed on a dysfunctional tax system that prioritizes consumption taxes, which are relatively easy to collect, over income taxes.

NYT