R$ 154 for this modest shopping basket, that's about £58, $93, Euros 66, NIS 327, Argentine Pesos 372. Products that are nice but nothing special in the UK or US are luxury items here, sold only in the "posh" areas. You ask the locals how come everybody is so rich that they can pay these kind of prices ? They never look too bothered, although some moan that car prices are even more shocking. Where's all the money coming from ? I think when China's
bubble economy bursts, Brazil will be left painfully exposed. As Warren Buffet says, it's only when the tide goes out that you see who has been swimming naked. A shopping basket like this tells me there is no real middle class here, and all the Americans apparently flocking down here to the country of the future should first check out how much their beloved peanut butter costs. Likewise all the Brazilians in London itching to return home to the land of opportunity. How much would this shopping basket cost in Asda, Tesco, Sainsbury, Morrisons, Coop, Lidl etc. etc. ? UK shoppers are spoilt for choice, even if food inflation has unnerved them in the past year or two. The price of everyday items here is enough to put you off your food. PS: Where are all the marketing promotions, the BOGOFs and suchlike? Pretty invisible to my eye.
UPDATE: The gravadlax gave me mild food poisoning.
Your examples really bring home graphically the disparity between UK/USA prices and what the same items would cost in Brazil. The cost for these particular standard food items is probably at least FIVE times as high in Brazil compared with what consumers would pay in UK.
ReplyDeleteBut many of these goods appear to be imported and that must affect the cost? I wonder if there are comparable Brazil produced foodstuffs and whether they would cost five times lower?
You seem to imply that the Brazilian economy is ver dependent on the Chinese? Would you mind elaborating?
ReplyDeleteHi Ofer. Since China is far and away the biggest buyer of commodities, then yes I would argue that Brazil is over-reliant on China.
ReplyDeleteThe article I link to above says that if and when China's economy deflates, "it’s going to impact economies that benefitted tremendously from China’s ascent, so Australia will be impacted, Russia will be impacted because oil prices will decline and Russia is basically a commodity-driven nation. Brazil will be impacted. Any economy you can think of that benefitted from China’s ascent will get hurt from its descent as well."
In addition, many of Bazil's exports, other than commodities, have been savaged by the over-strong Real. Re. the domestic economy, I suppose it is growing from a very low base but I still don't see many signs of an entrepreneurial, creative, innovative,competitive economy to offset the reliance on commodities.
You're not going to see an innovative entrepreneurial aconomy any time soon, largely dues to 3 key factors:
ReplyDelete1, A punitive regulatory environment which makes operating a business legally extremely time consuming and difficult to navigate, even without having to pay bribes (seen where Brazil is in the world corruption league);
2, A punitve tax system whereby imports are all but unaffordable, even moving goods between states is costly and hiring employees results in astronomical taxes;
3, Terrible infrsatructure making the movement of goods and people extemely tough, with next to nothing being done about this, and by infrastructure I don't just mean transport - the legal system is equally sclerotic, and workers are poorly educated and trained.
The Real will probably stay strong however as the economy is relatively well diversified and Brazilians have never exported much in terms of manufactured goods, whilst high inflation perpetually requires interest rates to match.
As for Sandra's question, the equivalent Brazilian products are by and large very poor substitutes, and that is where they exist at all.
Last comment was mine by the way
ReplyDeleteJon
I should have added to the list above the obvious 4th point - lack of finance available at anything other than essentially unaffordable rates. Witness the large construction magnate using zero debt finance in order to become successful.
ReplyDeleteJon
Thanks for these very informed comments Jon. It's a shame I can't seem to get a wider debate about all this. Just seems to beca take it or leave it mentality here and a take-what-you-can-as-quickly-as-you-can by the invading hordes of foreigners. The locals just don't seem to want to engage in sustained debate. Probably because the democracy is still too young and superficial. Shame.
ReplyDeletePS. Not shopping as a bachelor ! Doing a lot of home cooking. Feel a bit like it must have felt in UK 1950s while the age of austerity still reigned. Make things go further, savour each bite a bit more ! Our rented flat has a "maids room" that is more like a large cupboard. Thankfully it's not used.
ReplyDeletePPS. Yes it was the shop u mentioned ! We also tried Futurama on Av. Angelica, which was maybe a bit cheaper. Will try your recommendations.
ReplyDeleteBy the way, for furniture the place to go is Teodoro Sampaio in Pinheiros - parallel with Reboucas and perpendicular to Henrique Schaumann. Can't promise lower prices than UK, but its the least worst option I have found.
ReplyDeleteI was referring to when I lived there and shopped as a batchelor!
There are a few reasons the locals won't talk about this. Firstly they don't mind slagging Brazil off between themselves, but wo betide any gringo joining in - they'll just close ranks. Secondly huge sections of the populace are either illiterate or so poor/stupid they don't really know what's going on. Those who know what's going on feel resistance is futile and vote with their feet. A crappy press, tolerance of corruption and appalling leadership doesn't help. The last factor is that so few of them realise how much they're getting screwed over.
Jon