In Brazil, fish heads replace meat by stagflation

Signs of the pain caused by inflation are everywhere in the favelas surrounding the metropolises of Brazil.

There is the collected firewood that replaces the gas for cooking; and fish heads and spines are poured into stews instead of beef and chicken; and the intricate alarm tags that grocers wrap around cuts of meat to discourage theft; and the wave of graffiti that adorns the word “hunger” in bold building after building.

In the region that has become the main evidence of the increase in inflation spreading through the world economy, no country has experienced an outbreak as intense as Brazil. Consumer prices are rising at an annual rate of more than 10%, from 1.9% in 2020. To make matters worse, the economy has slipped back into recession just months after beginning its tepid recovery from last year’s collapse. .

This combination, known in economic circles as stagflation, is hitting the poorest Brazilians the hardest. Spikes in the cost of food, gas and electricity have pushed annual inflation for low-income families to 11.4%, according to the Instituto de Pesquisa Econômica Aplicada, a state-backed research agency known as IPEA. The rate is much lower (9.3%) for the wealthiest, revealing a harsh truth: the pandemic has exacerbated inequality in Latin America and in much of the rest of the developing world.

For Rubia Alves, inflation has meant serving her two children with chocolate milk and bread for dinner. When cooking gas prices soar 30% this year, preparing basic Brazilian dishes like rice and beans has become a luxury she can’t afford on the $ 200-a-month salary her husband earns as a doorman in Brasilia. .

“I can’t spend two hours with the stove on,” says 29-year-old Alves from his small house in a poor neighborhood on the outskirts of the capital city.

In the third quarter alone, Brazilians’ wages fell, on average, 4% after adjusting for inflation, government data shows. Furthermore, only one in four children receiving assistance from the government’s public health system is eating three meals a day this year. In 2018, that figure was 62%.

This all spells trouble for the president, Jair Bolsonaro, one year before he seeks reelection. With his popularity declining, he has launched various programs to help working-class Brazilians against the advice of advisers who fear the measures will only further fuel inflation. A social program will practically double cash transfers to the poor. Another will subsidize cooking gas.

Inflation is an old enemy of Brazil that monetary policymakers thought they had under control for the past three decades. But then came the pandemic, causing disruptions to the global supply chain and a surge in the price of basic goods that made items like food and fuel more expensive around the world.

In Brazil, the pain was compounded by a severe drought that increased the cost of energy production and a fall in the currency, further driving up the cost of imported goods. The central bank has sharply raised interest rates this year, raising them 5.75 percentage points, in an attempt to stabilize the real and stifle inflation.

Last year, the Bolsonaro Administration spent a lot to mitigate the effects of the pandemic, taking extreme poverty levels from around 11% in 2019 to a record 4.6%, according to data from the Getulio Vargas Foundation. But once emergency aid ran out earlier this year, poverty returned in force. Today, the figure stands at 13%.

Marcos Barreto can see the consequences in the number of burn victims who arrive at the public hospital where he works in Recife, a coastal city in northern Brazil.

An alternative to cooking gas that Recife residents have started using is ethanol because, he says, it’s cheaper than charcoal, doesn’t smell like gasoline, and is easier to find in cities than firewood. But the ethanol flame burns blue, making it dangerous and difficult to see. Barreto has so many severe burn cases now, about 50 a month, that he is often left without beds.

“People have turned to ethanol at a frenetic rate,” he says.

The growing gap between rich and poor is increasingly marked. A few weeks ago, a Brasilia steakhouse popular with politicians and lobbyists announced a Kobe meat festival. For 352 reais (US $ 62), equivalent to about a third of the country’s minimum monthly wage, VIP clients could feast on nearly a kilo of the exclusive wagyu meat.

About 10 miles away, Nilda Maria da Silva hasn’t eaten meat in months. The 65-year-old street vendor, who sells socks, scarves and shirts from her stall in a small town outside Brasilia, eats just one egg mixed with flour every day.

She says she’s worried that she won’t be able to pay even that soon. The eggs you buy are 28% more expensive than a year ago. And meat, flour, sugar and vegetables are up more than 10%.

Rising meat prices have driven more people to Wallace Dionisio’s fish shop a few blocks from da Silva’s stand. “Fish is cheaper than meat, so people buy more fish,” says Dionisio.

Still, it’s not the expensive salmon or trout fillets that shoppers are carrying. They are the cheapest cuts, he says.

First on the list are fish heads, which cost $ 1 each.

The last time Dionisio saw this level of demand for heads was during the 1990s, when he was a boy helping his father in the store and inflation was over 1,000% per year.