Famine is becoming the new villain for the government (and for the government) with great chances of influencing the electoral dispute. And the reason is simple: any Brazilian consulted sees the greatest evil in the country’s economy there. A recently released XP/Ipespe survey found: at least 97% of respondents say they are afraid of skyrocketing inflation and complain that prices have risen too much. The feeling of loss of purchasing power is a determining factor for the analysis of a government’s conduct. In another survey, DataFolha shows that 75% of voters directly blame the President of the Republic for the return of the inflationary dragon. It’s a surprising number. In practice, since this is the main challenge identified by the majority and it has not been overcome by the representative, the chance of punishment at the polls is high. The Planalto Palace turned on the red danger light in this direction. You know the indices have gone downhill for good. The Central Bank went public to say that it does not know what else to do to contain inflation. He admitted the possibility that it could rise from 11% throughout the year and suggested a remedy – too bitter – that annihilates any chance of GDP recovery in the short term: interest and more interest. According to the institution’s accounts, a Selic rate of around 12.75% would do the trick, bringing inflation rates back to the target – around 4.5% per year, as intended. It is difficult to guarantee this in the midst of a scenario that is also influenced by external prices. The rise in fuel prices, invariably, weighs heavily on the bill. To contain it, the government seeks to intervene, by force, throwing Petrobras’ autonomy to the winds. Bolsonaro changed the command of the state-owned company and fired General Silva e Luna for simply not responding to his demands for price control. The general’s departure does not directly resolve the matter, but it reinforces in the captain’s mind the idea of being able to get his hands on the company as he sees fit. The prices of the company’s shares, as a result, immediately followed a falling pace. Artificial price manipulation is the worst medicine in a so-called market economy. The hardships arising from prices in orbit, in any case, do not arise only from there. Public accounts are in pandarecos with the festival of federal spending, with the benefits of parliamentary amendments, electoral fund and quetals. Bolsonaro is wasting public money like there is no tomorrow, distributing kindness in exchange for votes and transmitting to investors the perception that a bubble could burst at any moment. Fiscal risk is the driving force behind inflation that is already confirming the second year in a row with out-of-target numbers. Since the advent of the Real Plan, in the 90’s, nothing so dramatic in this field was seen. Bolsonaro seems to be doing the impossible to resurrect the dragon’s ghost and may, himself, be devoured by this price incendiary.
Carlos Jose Marques editorial director
#Inflation #election #MONEY