The Broad National Consumer Price Index (IPCA), considered the official indicator of inflation in Brazil, fell 0.38% in May. This is the second consecutive decline in the index, which recorded a 0.31% decrease in April, according to the Brazilian Institute of Geography and Statistics (IBGE).
Still, according to IBGE, the services sector dropped 11.7% in April, compared to March. The results of the Monthly Service Survey, released today (17) by the IBGE, show that, in these three months of retraction, the sector accumulates a loss of 18.7%. Unemployment grew more than 10% in May alone.
According to José Paulo Kupfer, the "deflation of the IPCA in May deepens the deflation of April. Consumption of goods and, above all, services, down. Unemployment, loss of income, fear of contagion, and the 'precautionary savings', affect the activity, and keeps inflation below the floor."
Many economists are point out that with two consecutive months of deflation, the basic interest rate defined by the Brazilian Central Bank increases in real terms for the State's creditors. In this way, it ends up promoting a rent which, while benefiting a wealthy minority of the population, accelerates the country's economic recession further.
As Brazil moves quickly to scare the number of 50,000 killed by COVID-19, Brazilian companies continue to fail and breaking down and unemployment still rising. In this dramatic scenario, the Bolsonaro government meeting that went public shows only authoritarian delusions and bravado. The coronavirus crisis was not even mentioned in this meeting, which wasn't made any proposals to take Brazil out of the crisis.
Besides that, according to research conducted by the Page Group, more than 10 million Brazilians have already had reduced working hours and wages or have their contract suspended during the coronavirus pandemic. This made the country a leader in wage reduction in Latin America. In Brazil, 11.8% indicated the reduction in salary as a measure to face the crisis, while in Latin America it is adopted by 7.1%. The reduction in working hours, in turn, represents 7.8% of the responses against 4.2% in the region.
The scenario in which Brazil is heading should be marked by a deep drop in revenue, as a result of the slowdown in economic activity, high unemployment, and serious political crisis.
The scenario in which Brazil is heading should be marked by a deep drop in revenue, as a result of the slowdown in economic activity, high unemployment, and serious political crisis.
