Rising food prices compromise 22% of the budget of the poorest families.

247 - Food inflation has been putting increasing pressure on the wallets of Brazilians, according to a newspaper article. The GlobeA study exclusively by economist André Braz, from FGV, reveals that the prices of basic goods are increasingly compromising a larger portion of family income – a fact that has particularly severe effects on families with lower purchasing power.

Recent analyses indicate that food consumption by families earning between 1 and 1,5 minimum wages already represents 22,61% of their budget, compared to 18,44% in January 2018. This increase, even with the adjustment of the minimum wage – currently at R$ 1.518 – highlights how acutely the price increases are being felt. Since the beginning of 2020, the household food sector has accumulated an increase of 55,87%, well above the 33,46% measured by the IPCA (Brazilian Consumer Price Index) in the same period.

Economist André Braz clarifies: "Since it's consumption of basic items, you can even substitute food items, but you don't stop buying them altogether. The expense will end up compromising an increasingly larger part of the budget."

Experts point out that food inflation is contributing to the decline in President Lula's (PT) popularity. According to Professor Luiz Roberto Cunha, from PUC-Rio, "food prices have risen significantly since 2020, remaining above inflation. Even if they stop rising, they are at a high level. Any increase has a greater impact on the consumer's pocket. Meat is expected to rise less this year, 6%, but after already increasing by 20% last year." This consumer sensitivity, already accustomed to successive price increases, reinforces the need for more effective public policies to contain rising prices.

Economist Maria Andreia Parente, from Ipea, emphasizes that the growing weight of food in the budget "amplifies" the impact of price adjustments. For families with very low household income – up to R$ 2.202,02 – the impact can reach 29%, showing that price increases, especially for basic products such as meat, chicken, milk, eggs, and bread, have a more intense impact on the poorest.

Although the food group weighs less for households with higher incomes (for households with more than 30 minimum wages, spending on food increased from 9,23% in 2018 to 11,32% currently), the price increase has a widespread effect. Last year, factors such as the 27% rise in the dollar against the real, and the extreme weather events caused by El Niño and La Niña – which affected the production of foods such as coffee, which registered a 50,35% increase, and meat, with a 20% increase – created a veritable "perfect storm," according to Braz.

Given this scenario, the researcher warns that the short intervals between climatic phenomena – previously occurring every five or seven years, and now every two – make controlling food inflation even more challenging. He emphasizes that "normally, a good portion of these accumulated increases in meat, milk, vegetables, legumes, and fruits would have been reversed. But that's not what's happening."

This dynamic makes the Central Bank's job more difficult, since food inflation, being less sensitive to interest rate increases, limits the room for maneuver in monetary policy, increasing pressure on household budgets.

Among the government measures to mitigate these impacts is the replenishment of regulatory stocks, such as corn. However, while this strategy may offer some relief for certain products, experts like Professor Cunha point out that, in the case of meat, this measure will not have the same effect.

In the field of research, Embrapa, in partnership with Unicamp, has invested in the development of corn seeds with greater tolerance to adverse conditions – drought, excessive heat, and flooding. Juliana Yassitepe, a researcher at Embrapa Digital Agriculture, explains: "This was never a problem; it didn't cause economic loss. With increased temperatures, the insect multiplies faster. There is still no protection against this type of pest. We are having difficulty predicting climatic conditions to protect ourselves. There was frost in Goiás, where it had never happened before."

Given the current combination of factors – from climate fluctuations to global economic variables – the impact of food prices on family budgets is becoming a growing concern for Brazilian society. The measures to be adopted, both by the government and the productive sector, will be fundamental to mitigating the effects of this scenario, guaranteeing greater stability and food security for the most vulnerable.