When everything becomes a luxury good

Inflation in Brazil has persistently stayed in the double digits. And that has threatened consumption — the backbone of the Brazilian economy

inflation durable goods
Inflation is taking a toll on retailers in Brazil. Photo: Joa Souza/Shutterstock

The combination of high inflation and slow income growth is having a notable impact on the Brazilian durable goods market. Inflation-adjusted retail sales of household goods (including furniture and electric/electronic appliances) collapsed by 14 percent between June 2021 and January 2022. In the same period and using the same metric, demand for clothing, office appliances, and building materials contracted between 5 and 6 percent. 

With average real wages down 9 percent from a year ago and stubbornly high inflation rates, the poor sales performance of durable goods does not come as much of a surprise. However, it is intriguing that...

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