No item is more essential to a Mexican dinner table than a corn tortilla. But inflation engulfing Latin America and the rest of the world has meant people like Alicia Garcia, a sweeper at a Mexico City restaurant, have had to cut back.
Months ago, Garcia, 67, would buy a pile of tortillas weighing several kilograms each day for her family to take home. Now, her salary doesn’t go that far, and she’s limiting herself to just one kilogram (2.2 pounds).
Standing outside the tortilla shop, she told the Associated Press, “Everything has blown up here.” “How am I supposed to bear this earning the minimum wage?”
Just as inflation isn’t limited to tortillas, whose capital prices have risen by a third in the past year, Mexico is hardly alone. Latin America’s sharpest price spike in a generation has suddenly made many widely consumed local products difficult to obtain. Ordinary people see day-to-day life as a more painful struggle, without any respite.
Countries were already absorbing higher prices due to supply chain constraints related to the COVID-19 pandemic and government stimulus programs. Then Russia’s invasion of Ukraine in late February caused a sharp rise in fertilizer prices, affecting the cost of agricultural products, including corn. Global fuel prices also jumped, making goods transported by truck from rural areas to cities more expensive.
Annual inflation in Chile stood at 10.5% in April, the first time in 28 years that the index has reached double digits. Colombia’s rate reached 9.2%, its highest level in more than two decades. In Argentina, whose consumers have faced double-digit inflation for years, price increases have reached 58%, the highest in three decades.
In beef-crazy Buenos Aires, some families have started looking for alternatives to that staple.
“We’ve never bought pork before; now, we buy it weekly and use it to make stew,” said 56-year-old private security guard Marcelo Gandulfo after leaving a butcher shop in the middle-class neighborhood of Almagro said. “It’s cheap enough, so it makes a difference.”
According to the Beef Promotion Institute of Argentina, the average Argentine consumed less than 50 kilograms of beef for the first time since the annual data were first collected in 1958. Over the past few months, prices have been “moving up a lot more than usual,” said Daniel Candia, 36, a butcher.
“I’ve been in this business for 16 years, and this is the first time I’ve seen something like this,” he said.
World Bank President David Malpass said during an online conference on Thursday that Latin America is suffering from a “sudden price hike for necessities”. He said energy, food and fertilizer prices have been rising at an unprecedented pace over the years.
Around the world, central banks are raising interest rates to try to slow inflation. Brazil’s central bank has adopted one of the world’s most aggressive rate-hike cycles as inflation topped 12% – its fastest pace since 2003. In addition to factors driving regional inflation, Brazil’s agricultural products have become expensive due to drought and frost. For example, the price of tomatoes has more than doubled in the last one year.
Higher rates are the government’s primary tool to fight high inflation. But the risk of weakening the economy from rate hikes is so high that it could lead to a recession. Last year, the World Bank estimated the region’s economy to grow by 6.9% as it recovered from the slowdown of the pandemic. This year, Malpass said, it is projected to grow only 2.3%.
“It is not enough to make progress on poverty reduction or social dissatisfaction,” he said.
Brazilian newspapers are telling their readers what foods they can substitute for their usual products to help push the family budget. But some commodities, such as coffee, are irreplaceable – especially in a country that produces more of it than any other in the world.
So Paulo supermarket cashier Leticia Batista said ground coffee has become so expensive that shoppers have begun to turn their attention to it.
“It broke my heart, but I asked many of them to give the powder back,” Batista said in the upscale neighborhood of Pinheiros.
In her own humble neighborhood, she said, the cost of coffee “is a big problem.”
On the more advanced end of the java spectrum, engineer Marcelo Ferrara, 57, used to enjoy espresso daily at his local bakery. Its cost has risen 33% to 8 reais ($1.60) since January. So he reduces his intake to two every week.
“I can’t buy too many of these,” Ferrara said.
Countries in the region have simultaneously faced rising inflation for decades. Alberto Ramos, head of macroeconomic research for Latin America at Goldman Sachs, said a key difference now is that global economies are much more interconnected.
“There will be a need to raise interest rates, otherwise inflation will rise wildly and the problem will get worse,” Ramos said. “Governments cannot be afraid to use rates. It is a proven medicine to bring down inflation.”
As of now, however, there is not much hope from higher rates that inflation will decline significantly in the near term. The International Monetary Fund projected last month that average inflation in the region excluding Venezuela would slow to 10% by the end of the year. According to the IMF’s World Economic Outlook, this is not much lower than the 11.6% rate recorded at the end of 2021 and still more than double the 4.4% expected for advanced economies.
“It will take at least a couple of years for relatively tighter monetary policy to deal with this,” Ramos said.
That means belt-tightening and going without certain consumer staples is probably the new norm for the poorest members of society in a notoriously unequal region. According to a World Bank study published last month, more than a quarter of Latin America’s population lives in poverty – defined as living on less than $5.50 a day – and is expected to remain unchanged this year. Is.
Sara Fragosa, 63, a housewife in Mexico City, didn’t hide her anger at the rising prices during an interview at a market stall.
“Those who are the poorest are the worst,” Fragosa said, adding that he has replaced his regular beef purchases with quinoa and oats.
“You’re not used to it,” she said, “but you have no choice.”
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