Good morning! Today we are looking at Brazil’s economy, which registered deflation in September. There’s also the latest from Jair Bolsonaro’s squabbles with his own party—which could lead to an exodus—and we analyze the benefits of being a civil servant in Brazil. (This newsletter is for platinum subscribers only. Become one now!)
Deflation: supermarkets get cheaper as economy sputters
Prices in Brazil saw a decrease of 0.04 percent in September, representing the biggest deflation for the month since 1998. This drop was largely influenced by a 0.43 percent fall in the cost of food and drink, which decreased for the second month in succession, according to the Consumer Price Index (IPCA).
Why it matters. This deflation is more a result of Brazil’s sluggish economy than anything else. It now provides the conditions for the Central Bank to promote even more radical cuts to the basic interest rate, in an effort to stimulate investment and consumption. The benchmark rate is currently at an all-time low of 5.5 percent, but analysts now believe it will drop to 4.5 percent by year-end.
Breaking it down. Food items make up one-quarter of family budgets in Brazil. Among the products which saw the most significant...