Understand why INFLATION changes prices so much in the Brazilian market

Despite the name inflation being well known and appearing constantly in newspapers and even in daily conversations, many people do not understand how this rate affects the economy. In Brazil, this tax is a direct regulator of prices passed on to the population.however it is directly influenced by the foreign market.

Understand why INFLATION changes PRICES so much in the Brazilian market (Image: Montage/FDR)

In a capitalist country, as is the situation in Brazil, the economy does not depend only on interests and domestic politics. The situation in other countries also messes with local rates and the level of inflation that the consumer you will feel it directly in your pocket. When wars happen, large-scale natural disasters, or even the pandemic, market fluctuation can become disastrous.

More broadly, inflation works as a thermometer between supply and demand for a particular product or service. When there is a high demand, but the availability of the product is low, the price paid for this tends to increase.

This means that inflation acted on it, even in a simpler way, this change occurs in different sectors and levels of the economy and also of society.

In recent years, the world has faced many of these turbulences, especially with the fight against COVID-19 and Russia’s war against Ukraine.

These two factors were decisive for Brazilian inflation to exceed expectations for this year. However, the improvement in the global health situation and the deceleration of the military conflict should give space for new breaths in the Brazilian economy.

The cycle of inflation in the world

One of the greatest examples of how the political situation in other countries can directly affect the Brazilian’s pocket was Russia’s war against Ukraine. Although the reasons for the invasion were political, the world economy suffered the effects, as Russia is the third largest oil producer in the world.

The price of a barrel of oil directly influences the amount paid per liter of gasoline, which is still one of the most used fuels in the world. Faced with the complicated situation it faced, Russia considerably increased what was paid per barrel.

The maneuver served both to be able to keep more fuel in its territory and to increase the economic reserve, since taking the risks of entering a war can be expensive.

This situation reverberated in Brazilian gas stations, when the population saw the liter of fuel reach very expensive levels. In some places, it was paid R$ 7 per liter of gasoline.. And then the consequences of the high price of this fuel spread across the country.

With the most expensive gasoline, transporting consumer goods and food also becomes more expensive, and the increase is passed on directly to the final consumer. Therefore, some foods had a significant rise in price, especially those that come from outside the region of consumption.

Often the reason why prices are fluctuating so much is not so simple to understand, as even small movements in the market can cause a big shift in local rates.

However, it is important that the population is aware of the existing world context and, mainly, understand what national policy has done so that transfers to the population are reduced.

The article is in Portuguese

Tags: Understand INFLATION prices Brazilian market

PREV The weight of the escalation of the war on oil prices
NEXT When does Scott Mills start on Radio 2? Why he left BBC Radio 1 and who he will replace