The prolonged slowdown in inflation in Brazil has not met consumer expectationswho increasingly blame President Luiz Inácio Lula da Silva for a perceived decline in purchasing power.
67% of Brazilians said their purchasing power decreased over the last year, more than double the percentage recorded in October, according to a Quaest survey published last week. At first glance, that perception is difficult to reconcile with economic data, which shows that inflation is cooling and wages are rising.
Average real incomes are near the highest levels since November 2020 and have increased more than 4% since Lula began his term in January 2023. Annual inflation slowed to 3.69% in April, government data showed on Friday, and the rate has fallen more than 2 percentage points since the leftist leader returned to power.
However, these figures do not fully reflect the latent costs of food and services, which have skyrocketed in recent months and have a significant weight in shaping public opinion. Things may get worse before they get better after floods devastated a key agricultural region this month. In the eyes of many voters, the situation is damaging the reputation of Lula, who returned to the country's top office with a promise to restore prosperity and improve living standards.
“This is not pure mathematics,” said Marcia Cavallari Nunes, director of the Ipec pollster. “Perceptions are formed by people's own expectations of Lula and what they can really afford to buy at the supermarket.”
Economists note that food and beverage costs rose in the first quarter at about twice the pace of overall inflation, pressured by seasonal factors and exacerbated by the El Niño weather pattern. That trend was repeated in April, when they rose 0.7%, almost double the overall increase in consumer prices.
While other closely watched items, such as airfares and fuel, have also seen price increases recently, the rally in food is far more politically damaging. In fact, an April Ipec survey revealed that 46% of respondents thought the government was doing a poor or terrible job fighting inflation.
“Food inflation is what gas prices are to American voters,” said Christopher Garman, managing director of political risk consultancy Eurasia Group.
Growing frustration about the economy is part of the reason for the 10 percentage point drop in Lula's approval rating since August, according to Quaest. Disapproval has risen 12 points, to 47%, in the same period.
As in other countries, political polarization affects voters' perspectives. Polls show an overwhelmingly negative view of the economy among Brazilians who backed Lula's right-wing predecessor, Jair Bolsonaro, in the 2022 presidential election.
In this context, Lula's general approval ratings, close to 50%, remain much better than those of his counterparts in countries such as Chile, Peru and Colombia.
However, the pain of rising prices is compounded by an economy that is slowing after a stronger-than-expected year. The combination of abundant harvests, fiscal stimuli and social spending boosted real incomes and, with them, Lula's approval.
In the coming weeks, his government will face intense scrutiny over its response to devastating floods in the southern state of Rio Grande do Sul, which have left more than 110 dead and 330,000 displaced. The region is key to the production of staple foods such as rice and beef, and economists warn that the destruction has the potential to drive up food prices even further.
Analysts surveyed by the central bank are already revising their inflation forecasts upwards. They now expect consumer price increases to reach 3.76% in December, above the 3% target, according to a survey released Monday.
In the absence of another big economic boost, “we will see more deterioration in Lula's numbers,” said Garman of Eurasia Group. “We are in an era of weaker governments and lower limits on presidential approval ratings.”
