Brazil’s Middle Class Going Back to Essentials

Due to inflation, middle class is eliminating superfluous services and goods and concentrating on essentials.

By Lise Alves, Contributing Reporter

SÃO PAULO, BRAZIL – In the past decade Brazil witnessed the surge of its middle class, termed ‘C class’ which is defined as a per capita monthly income of between R$320 (US$144) and R$1,120 (US$503). During this time an estimated 35 million have moved up from poverty and entered the middle class and today the C class represents 54 percent of Brazil’s population.

Supermarket in Brazil, Rio de Janeiro, Brazil, Brazil News

Supermarkets registered a boom in sales during the past few years, photo by Tiago Silveira/Flickr Creative Commons License.

With this growth a sizable new segment of the population who once barely were able to pay their bills started to purchase durable goods and were able to obtain credit. Shopping centers sprawled up in poorer sections of towns and consumption boomed.

Now according to a study by Instituto Data Popular (IDP), perspectives for the near future are not promising. The study’s results shows that 85 percent of Brazilians believe that they will not have the same purchasing power they had in the past.

In addition seventy percent believe that prices will increase even further by the end of the year. According to the IDP this segment of the population, which spent close to R$ 1.17 trillion in 2013, has lost nearly R$73.4 billion in purchasing power due to rising inflation.

In the past twelve months according to the IBGE (Brazilian Statistics Bureau) the IPCA (Consumer Price Index) has accumulated an increase of 6.28%, but many services such as school fees and health plans, now part of the budgets of many middle class households, have been readjusted well above official inflation rates.

Shopping Center in Brazil, Rio de Janeiro, Brazil, Brazil News

Shopping centers sprung up due to stable economy and larger middle class, photo by A.Junior/Flickr Creative Commons License.

Meliane Silva works twice a week cleaning houses in São Paulo. She has two daughters and her husband works part time as a painter. On a good month they can make close to R$1,500. “Last year for the first time my girls tried yogurt,” she says, but adds “This year our bills increased much more than our wages and everything is more expensive.”

Now, after almost a decade and a half of relative economic stability, inflation has become a concern for both Brazil’s government and its population. Brazil’s middle class, which prospered and grew significantly under ex-President Lula’s administration, has been perhaps the class which has suffered the most with the rising costs.

Nonetheless, says Paulo Feldmann, economics professor at FEA-USP, unemployment rates are low and the economy is working. According to Feldmann it is unlikely that many will fall back below poverty lines again. “What is occurring is that the middle class is giving up the superfluous, non-essential items,” he adds.

According to Feldmann the government seems to be aware of the inflationary pressure and is taking measures to keep inflation rates from rising too much. “The government is keeping a close tab on inflation and has held off increasing the prices of gasoline and electricity,” says the professor.

For Meliane Silva, however, current inflation is already changing the family’s habits, cutting back on things like cheese, yogurt, and snacks. “It has been difficult to pay the bills this year,” she says with a sigh. “We are back to buying only essentials.”

8 Responses to "Brazil’s Middle Class Going Back to Essentials"

  1. American In Rio  May 28, 2014 at 2:19 PM

    “C” Class. In what part of Brazil does R$320 per capita buy a middle class life? This just fantasy talk of the PT. Even at the highest part of the range, you’d be categorized as below the poverty line in the US.
    Hopefully, the PT will be out after the elections and some honesty can return to government.

    BTW, how about their nonsensical claim that unemployment is 4.8%! Or that inflation is just 6%!

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  4. Alex Murray  May 30, 2014 at 6:22 PM

    As stated in another post by “American in Rio” how can one be classified as “C Class” with a monthly income of R$320 to R$1,120 ? Again as stated by “American in Rio”, this is “fantasy”. With an income of R$320 in the USA, you would be a homeless person and street beggar. With an income of R$1,120 you would be classified as below poverty level. So it baffles me how Brasil can classify any person as “C Class” even at the highest level as stated with an income of R$1,120. Several persons with individual incomes of R$1,120 would have to be living together in one household to even exist in Rio and not much better in the countryside.

  5. Mike in São Paulo  June 1, 2014 at 10:35 PM

    R#320 a month buys quite a bit more here in Brazil than it does in the US. A monthly income of R$1,120 equals an annual income of over R$13,400. For a single person that is above poverty in the US.

    Here in São Paulo, I can live quite comfortably, and have on less than R$1000 a month. And that’s buying quite a bit more than just the necessities.

    The cost of living in the US, for the most part, is at least 3 times what it is here. You both would be wise to keep that in mind.

  6. American In Rio  June 2, 2014 at 12:08 PM

    I think your facts are way off base. And, frankly, even though you claim you can live on R$1000 I don’t think any of the other readers here could fathom how. You certainly aren’t paying rent, electricity, cell phones, land line phone, IPTU or IPVA. My 2 dogs (large) alone consumer R$300 a month is dog food!
    According to Wikipedia the US Federal poverty line for 1 person is R$25,674 a year (http://en.wikipedia.org/wiki/Poverty_in_the_United_States). That means that most of Class B in Brazil is also below the povery line. A back of the envelope estimate I did some months ago concluded that approximately 80% of Brazilians fall behind the US definition of poverty.
    And, I would suggest that anyone looking at BR government figures take them with a grain of salt. Their math doesn’t usually add up. There household figures are absurd and can’t be believed.

  7. Rio Rich  June 4, 2014 at 4:34 PM

    This is a joke I’ve been going to Brazil since 1983. I wanted to retire in Brazil, TX, FL or NV. But Brazil is out of the question now. I was in Rio last year, and the prices of things are more expensive than here in NYC. I don’t want to cook I’m not used to cooking while in Rio. Fast food place except Subway cost more than in the states, $10 for a coke, Dbl cheeseburger and some fires, are you kidding me at Bobs. The workers have a food allowance, built into their contracts there. R$1000? That’s about $500 US, a month. There is nowhere I’ve been in the last four years that is more expensive than Rio. I’m sure you can find some way out the way ugly worn down place for 500R$ to live monthly. What the heck do you eat, water and crackers? I spent $10 a day in the supermarket and that wasn’t what I usually eat. Good ice cream is $10 a half a gallon, in the supermarket. So minimum it’s 600R$ for food ($10 x 30 ~ 300R$). Now you got 700 R$ ($350) left over. If you work, $6 for the metro x 20 days= 240RS. Now you have 460R$ left over. What kind of apartment or house you’re going to live in for $230 a month? I couldn’t live down there now, I not going to pay more for food, than I do up here. I had to use my debt/credit card to buy food down there in a supermarket. I’ve never did that before, but I wasn’t going to starve. I couldn’t afford to go to the beach everyday and hang with my beach guy. $20 x 10 days is $200. I needed that money to eat now. Over a year later and I’m still paying for my 2013 trip, because of the price of food there. I won’t be going back to Brazil, unless the prices become cheaper than here. I’m not eating crackers while on vacation.

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