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real inflation

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  • #276051

    Gieke
    Participant

    Hi all,

    I was reading the comment on inflation in the newspaper : “IPCA acelera e chega a 8,89% em 12 meses”
    So many indices exist in Brazil: IGP, IPA, IPC … 20 are published in the newspaper. The IBGE authority with the IPCA inflation indice seems to be more ‘official’ But is it realistic? Does it reflects the rise in prices the average brazilian household experiences ? I mean not just the cesta basica, but also transport, education, telephone, housing….
    Talked to the bank manager, he said 15% is more likely !
    But that’s apparently just a feeling, not proved with figures…
    What’s the real inflation ?
    Guido
  • #276052

    Anonymous

    It depends a lot on the stick that you measure it with. Not everyone buys the same basket of goods and services, so each man’s inflation is different.
    One thing is certain, however: the government understates the number(s).
    Throughout the years, the government has made several changes to the basket which is used to calculate inflation. This has the effect of disguising the true inflation; most likely for political gain or to massage (some would say manipulate) market perception.
    Your bank managers guess of 15% is much more correct than the government’s 8-9% number.
    However, some areas inflate slower than others. For example, Internet providers just got authorization from Anatel to up their prices by a little under 5% and won’t be able to increase those rates again for another year.
    Then you have areas which depend on imports, where a 30% year on year increase in the value of the US dollar will need to be translated into price hikes locally (or something else has to give.)
    Your best bet is to figure out your own household’s basket of goods and services and then track those increases in a spreadsheet. I did, and found that for us inflation in Brazil is currently on the order of 21%. The largest single increase is on electricity cost, but in our case fortunately electricity doesn’t weigh much in the overall basket. The second largest increase came from imports, like specialty foods found in delicatessen. But YMMV.
    Yes, 21% inflation is three times as much as what the government claims.

  • #276053

    Finrudd
    Participant

    Inflation is a curious thing and Picolino has a good point about how everyone has a different level to deal with. I think one thing that comes into play that is less often considered is how you choose to manage inflation in your basket of goods. For example, you may choose to offset some inflation against quality of life. Your imported gin is getting too expensive? Switch to cacha√ɬßa and tonic (I haven’t tried – sounds terrible!) or substitute your R$45 per kg Picanha for R$30 per kg Maminha (I made those prices up before anyone jumps on me).

    Of course, some things are harder to substitute – petrol and electricity being two. However, we could downsize to a more economical car model, and ensure we have swapped as many lightbulbs as possible for low-energy/LED bulbs to reduce consumption. I have removed electrical heaters from the house and bought wood burners that can heat the house from fallen wood around the place. While none of these things change the underlying fact of inflation, they do change how it hits our bank balances. Some may require an initial investment – swapping electrical water heaters for solar, standard lights for LED, electrical heaters for woodburners, however, as I see it, inflation is not going away anytime soon.

  • #276063

    jeb2886
    Member

    What they’re trying to do with inflation is find a number for how much it’s costing the regular family. 8% for a regular family is probably pretty much in line. They aren’t buying beef that often, let alone picanha. If you’re able to buy the best meats on the market, then inflation isn’t really a pain thing for you, it’s an inconvenience and might require some lifestyle tweaks, but it’s not killing you. People with essentially 0 disposable income is where it hurts, which is generally a good part of the population in most countries.

    What drives me crazy is when they use 2 different numbers. In 2008 X was the number, and then in 2015, using a completely updated and different number it’s 500% up! OMG!
    Using a fairly consistent number is what is needed. It doesn’t matter if the government swaps in a few things or out, as long as they aren’t swapping out say cars and saying bicycles are the new replacement.
    And when a country relies on commodities for it’s exports, and those are tanking, of course imports are going to really hurt… Inflation for most of us is probably really high.
    @finrudd nothing eats up power like those electric showers, I figure they’re about 1/3rd to 1/2 of most people’s electric bills. Running those things for 15 minutes per person a day chews up power like nothing else. Solar is definitely the way to go around here. Since we’re not looking for scalding hot water replacements, solar even on a mild day will likely provide all the hot water a normal house needs around here, and if not, it will allow for much lower temps to be used on those showers!
  • #276065

    celso
    Member

    @finrudd nothing eats up power like those electric showers, I figure they’re about 1/3rd to 1/2 of most people’s electric bills. √Ǭ†Running those things for 15 minutes per person a day chews up power like nothing else. √Ǭ† Solar is definitely the way to go around here. √Ǭ†Since we’re not looking for scalding hot water replacements, solar even on a mild day will likely provide all the hot water a normal house needs around here, and if not, it will allow for much lower temps to be used on those showers!
    I want to bring an outdoor propane or LNG hot shower unit. I think it would fit in a suitcase and would work with the butijao de gas. Are adaptors needed for the hoses? Anybody do this? In the US, these shower water heaters cost about $ 250.
    http://www.sportsmansguide.com/product/index/deluxe-tankless-water-heater?a=1588404
    I spotted an old law from 1991 which prohibits using the butijao for piscinas, so this could be illegal. So bang your head with a stick.GreatBallsoFire2015-07-10 22:55:05

  • #276073

    Anonymous

    those things are pretty common down here in the south. I don’t use one (had one in Japan, though) but since they are so common, you should be able to find fittings. Usually people use them with the bigger propane tanks, not the botijão, I don’t know if that is just for practicality or if there is another reason.

  • #276076

    Finrudd
    Participant

    [QUOTE=GreatBallsoFire]
    @finrudd nothing eats up power like those electric showers, I figure they’re about 1/3rd to 1/2 of most people’s electric bills. Running those things for 15 minutes per person a day chews up power like nothing else. Solar is definitely the way to go around here. Since we’re not looking for scalding hot water replacements, solar even on a mild day will likely provide all the hot water a normal house needs around here, and if not, it will allow for much lower temps to be used on those showers!


    I want to bring an outdoor propane or LNG hot shower unit. I think it would fit in a suitcase and would work with the butijao de gas. Are adaptors needed for the hoses? Anybody do this? In the US, these shower water heaters cost about $ 250.

    http://www.sportsmansguide.com/product/index/deluxe-tankless-water-heater?a=1588404

    I spotted an old law from 1991 which prohibits using the butijao for piscinas, so this could be illegal. So bang your head with a stick.[/QUOTE]

    My neighbour fitted a normal Bosh gas water heater that runs on gas bottle (no street mains here) and they are not that expensive, as mentioned, the saving in electricity consumption would probably offset it quite quickly. They range in price from R$600 to over R$4k, depending on the capacity you need.
  • #276202

    Gieke
    Participant

    don’t need to bring it, buy it in brazil.

    google for “aquecedores de agua a gaz”

    there are different makes : Bosch, Lorenzetti, Rinai…
    prices usually around 1000 R$
    I find electricity in a shower absurd …10 years ago, first thing I did was to ban all electricity out of the shower, bought a bosch an has been heating since then.
    A bottle last 4 weeks for showers and warm water in the kitchen.
    Recently bought a small one, 15Lt capacity, enough for a shower or kitchen sinc. for 600 R$
    Kitchen next to bathroom, heater sits on the common wall, making pipes as short as possible.
    Gas bottle out of the house, use a pex tube or copper, not just a manguera to go trough the wall. Copper must be wrapped to protect it from cement.
    Guido
  • #276212

    Finrudd
    Participant

    Just read this quite interesting article, which refers to “infla√ɬßão √ɬ†s avessas” – http://extra.globo.com/noticias/economia/pesquisa-do-extra-mostra-55-produtos-que-tiveram-conteudo-ou-tamanho-reduzido-nos-supermercados-16734867.html?utm_source=Facebook&utm_medium=Social&utm_campaign=compartilhar

    In short, rather than inflate prices, reduce the sizes/quantity/volume. This happens the world over (and quite often makes the press in the UK when Milkyway Bars are found to be 1.89% smaller, for example) but is another type of inflation.
  • #276267

    Anonymous

    Good catch, finrudd. I’ve seen this a lot lately.
    The latest example — we bought one of those yellow boxes of domestic chocolates yesterday: It is just 300 gr., having gradually been winding itself down from 450, 400, 385, 350, 340 grams and so on, over the years we have been either living in Brazil or visiting regularly.
    The physical cardboard size is the same. It is just the inside which is emptier. (And lest anyone think I am unfairly singling out Garoto, note that the two makers of the blue chocolate boxes follow the same playbook.)

  • #276273

    Tony
    Participant

    We are going back to the 80’s inflation days, that’s for sure. Buy dollars , hoard what you can , run for the hills, get out of the country.

  • #276344

    jeb2886
    Member

    @pico, I was just thinking about your 21% number, and it seems pretty high.

    Are you comparing your inflation numbers on a one for one replacement on what the government uses, or are you doing a full inflation number on all the goods and services you are using?
    These inflation numbers are really only going to hold true for a narrow range of people/income, but essentially they’re assuming everything else in these people’s lives are somewhat similar and following roughly the same type of inflation. So 8% is likely to be across the entire board for most people, while for us, cherry picking a basket of items is likely going to lead to a vastly higher number than it really is.
    I could see some of your food items going up, but the biggest items in your spending are probably car, rent, health insurance, car insurance, buying consumables, and eating out. I guess depending on where exactly you live, rent could be skyrocketing, but rent should be roughly 30% of your budget, if it’s not going up, that means your other items are going up 40-50% to make up the difference which seems highly unlikely.
    The one caveat I think that many are falling into is restaurant pricing. I think we’re seeing a price adjustment, rather than price increases in this area. Eating out has changed in the last decade in Brazil from something you did to eat, versus entertainment (for the local/mass population). So prices are really changing to reflect that mentality change, rather than going up because of a cost of business number. Of course, this being Brazil, the guy selling the R$1 mystery burger sees the guy down the street selling a gourmet burger for R$50 and decides he can charge more, not for any real reason, other than the other guy can do it, why can’t his mystery burger command a much higher price! It’s probably one area I wouldn’t include in my inflation numbers, because it’s a “new” market and prices are just testing out where they can go.
    For me, my rent has stayed the same (I could probably get it reduced by 20% actually). If I bought my car this year, it would be roughly the same price. Health insurance went up about 18%. My food budget has changed over the last year, so it’s hard to say there, it’s definitely gone up, but my food choices are definitely different. Picanha went up about 30%, which could be considered a good part of my food budget 🙂 But because rent is such a large ticket item, inflation wouldn’t be very high for me, in fact it might be negative in my case.
  • #276351

    Anonymous

    JK, that was my reaction, too: “21% seems pretty high.”
    But that was the number the spreadsheet spat out, and of course I had to caveat it by saying I don’t live and spend like the typical Brazilian.
    Moveover, I certainly haven’t allowed inflation to change my lifestyle, so that also helped drive the number up.
    Regarding rent: We are property owners, so we don’t rent.
    If anything, we probably suffer from a downturn in that market because we derive rental income from a couple of apartments in Sampa.
    I should not complain too loudly, however, because I also get US-sourced income and year-on-year the dollar has appreciated more than my 21% number.
    And in the end, it is really not about how much (or how little) money you spend.
    It is about what you do with it.

  • #276356

    jeb2886
    Member

    If you bought outright, I could see your number being higher, if you had a mortgage I would assume that 21% would be lower because the cost there would really chew into your budget.

    If you eat out a lot, I think restaurants probably shouldn’t be included, because they’re on their own path right now. I would be interested to see if you could pull that number out what it looked like, realistically, pulling one item out of the budget shouldn’t change that 21% because “everything” should be moving up in that range at the same time, but I think it will likely make it move more than it should. 21% still seems really high! I assume for a normal “well off, working class” brazilian, they would have a car payment or perhaps two and a house payment in there, and thus it would probably be in the 12%-15% range for them.
  • #276369

    Anonymous

    Right: No mortgage in my case, and no car payments either. Everything I buy, I’ve always bought it “a vista” so there are no install payments ever to keep up with.
    Eating out a lot? Dinners, two or three times a week. Lunches, probably a bit more.
    Spoke to another professional about inflation and he estimates Brazilian will finish at around 15% this year, with the government reporting just shy of 10% as being the “official” number.
    My own 20%+ figure is, as we’ve already established, due to not being a typical snapshot of the typical local’s spending.

  • #276373

    lilina
    Member

    You all are way over-thinking this. Pay in cash and stay out of debt. Simple.

  • #28494

    belltown98
    Member

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