Food Sales Down after Price Hikes: Daily

By Ben Tavener, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – Sales at hypermarkets and supermarkets, including food, drinks and tobacco products, fell 2.1 percent in February year-on-year, the biggest drop the sector has witnessed in nearly ten years, data from the Monthly Retail Survey conducted by the Brazilian Institute of Geography and Statistics, IBGE, have shown. It is also the first drop in sales since March 2009, Valor Econômico reports.

Deputies Onyx Lorenzoni, Mendonça Filho and Ronaldo Caiado protest against high inflation and its impact on food, Brazil News

Deputies in Brasília recently protested against the high level of inflation and its impact on food prices, photo by Valter Campanato/ABr.

Already in February 2013, sales had dropped a percentage point after a 1.4 percent increase the month before.

The IBGE said a peak in food prices, and a subsequent drop in consumption, has been blamed for the plummeting sales: “Due to the hike in prices, we believe there has been a drop in food sales by families,” the IBGE’s Aleciana Gusmão was quoted by Folha de S.Paulo as saying.

The IBGE says food and drink prices has gone up nearly 13.5 percent in the twelve months to the end of March. Inflation is also higher than the government had hoped.

In addition, industry prices have been well above average, up 6.8 percent over the last year, and elevated fuel prices are also believed to have contributed to the drop in sales.

As a result of sky-high prices, restaurants in Rio have been forced to rethink their menus, according to O Globo newspaper. Tricks reportedly employed by some eateries include cutting dish sizes, switching out expensive ingredients and even halting dishes one some days, rather than making dishes more expensive and passing on the price hike to customers.

Earlier this week it was announced that the price of the cesta básica – the “basic basket” of essential foodstuffs – had gone up in all but two cities, despite tax cuts announced by President Dilma Rousseff in March. In Rio the “basic basket” of essential products had increased 2.66 percent to R$314.99 a month.

Read more (in Portuguese).

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