Food inflation triggers warning for Bolsonaro

Food prices must be at the top of a list with the many economic variables a Brazilian president must be attentive to — as they weigh disproportionately on the poor and spark disgruntlement among a significant proportion of the electorate. Jair Bolsonaro knows this — and all the alarm bells have rung in Brasília as official inflation data was released today. The overall rate shows a rate of mere 0.7 percent since the beginning of the year, on pace to finish 2020 far below the government’s 4-percent target.

But Brazilians are beginning to feel the rise in food prices, which fuels pessimism about the economy. A recent survey by pollster Datafolha shows that 70 percent of low-income citizens believe prices will continue to rise in the near future. In reaction, Mr. Bolsonaro asked vendors to prove their patriotism and reduce their margins to “next to zero” in order not to overburden poor consumers.

But why is the specter of inflation haunting Brazil again in the middle of a pandemic?

For economist Victor Beyruti, an economist at Guide Investimentos, rising inflation is the result of the reopening process of the economy, coupled with monetary and fiscal stimulus. “This price hike tends to be momentary,” he told The Brazilian Report. He added that he “still believes in a very benign scenario for price formation in the economy.”

The inflation rate is not the same for all Brazilians

While the data should not be enough to force...