Brazilians fear the return of abusive inflation
One of the main indexes used to measure inflation in the country, the IGP-M (general price index - market), has skyrocketed in the recent months following the rise in the dollar.
The country's new monetary policy, which seeks to keep interest rates low and at a time when consumption was supposedly low, devalues the local currency, making the environment perfect for exporting, but terrible for consumption.
Many of the products that are part of the consumption basket of Brazilians have undergone unusually high changes. The value of rice, which before the pandemic cost R$ 8, is now found for R$ 30 on the market shelves.
According to Mauro Rochlin, economist at Fundação Getúlio Vargas (FGV), the big villain is the dollar. "The exchange rate issue is fundamental," says the professor, explaining that the appreciation of the American currency directly affects commodities, which are products sold internationally. "Commodities are based on the dollar. This explains not only the price of rice, but also of soy derivatives and other products", he adds.
At the moment, all central banks seem to be taking ill-considered actions, whether it be acquiring more debt, injecting more money into the market or keeping interest rates excessively low. In all cases, there does not seem to be even a government concerned with investors or savers, who see their purchasing power plummet. More than ever, investors must look for deflationary assets, such as gold or Bitcoin to protect their purchasing power in the long run.