Brazil's poor squeezed by less Coronavirus aid, surging food costs

Many people in Brazil are struggling to cope with less pandemic aid from the government and jumping food prices, with millions expected to slip back into poverty.

Brazil's government, starting this month, halved the amount of its monthly emergency cash transfers to help Brazil's poor withstand the hardship of the economic meltdown, down to 300 reais (USD 54).

As the government winds down the program through year-end, with unemployment still high, many of those people who benefited will become newly impoverished, according to Marcelo Neri, director of the social policy center at the Getulio Vargas Foundation, a university and think tank. Half of them are expected to fall into poverty in October alone, he said.

 

The program, which started in April, has been the main driver behind lifting 15 million people from poverty, including 2 million from July to August, according to a report the university published Friday.

Poverty, which the FGV defined as income equal to half a minimum monthly salary, or 523 reais, has reached its lowest level since at least the 1970s, according to Neri, the report's author.

Marcio Santos, 27, used to sell water at traffic lights in Sao Paulo. Nobody wants to buy from him anymore, fearing COVID-19 contamination, so he's been relying on the government's pandemic cash program. Receiving 300 reais monthly instead of the 600 reais he collected for months is blowing a hole in his finances.

For a family that receives aid of 300 reais, how can we take care of our 5 kids with this? There is no way we can buy milk, diapers, food, he said.

President Jair Bolsonaro told the United Nations General Assembly last month that the pandemic cash program had buoyed the livelihoods of 65 million Brazilians, making it one of the world's largest such initiatives.

Political analysts have widely attributed the jump in his popularity to the program's success. Some 40% of Brazilians surveyed by pollster Ibope rate Bolsonaro's government as good or excellent, according to a poll published September 24.

But the Brazilian government lacks the fiscal space to maintain the costly program. What remains to be seen is whether Bolsonaro's approval ratings will tumble as aid is withdrawn.

Meanwhile, rising food prices have also been hurting the poor.

Inflation data that Brazil's statistics agency released Friday showed a 2.3 per cent jump in food and beverage prices in September, its biggest increase for that month on record since 1994.

Food prices have increased 7.3 per cent during 2020, with some staples like rice, milk and tomatoes jumping 41 per cent, 30 per cent and 26 per cent, respectively.

Higher food costs are being driven by a weaker exchange rate, boosting Brazil's exports and reducing domestic supply, according to Pedro Kislanov, who coordinates the statistics agency's inflation survey.

There's also been heightened domestic demand due to the government's COVID-19 aid program.

A caregiver for the elderly, Cleide Valente, visits the same Sao Paulo street market every week, and on Thursday she complained about the cost of food.

(Before the pandemic) I could do a good purchase with 120 reais. Today, I already spent 160 reais here, Valente, 57, said.

According to the World Bank, up to 150 million people globally could slip into extreme poverty, living on less than USD 1.90 a day, by late 2021. The exact amount will depend on how much economies shrink during the COVID-19 pandemic, the bank said Wednesday in a report.