07/01/2024 – 6:01
Freezer as an object of desire, prices that doubled depending on the store, difficulty in planning. Daily life during hyperinflation was full of challenges, and the calculating machine was an indispensable companion. Today it may seem strange, but before the real, launched exactly 30 years ago, Brazilian families and companies adopted creative behaviors to protect their money from constant rise in prices.
Routines such as going to the supermarket as soon as your salary was deposited, having several savings accounts and investing in large stocks of products – not very efficient – were essential in the face of inflation that reached 80% per month.
This period also had traumas that never happened again, such as price controls, chronic shortages of products in supermarkets and the confiscation of savings.
See what daily life was like for families and companies in most of the 1980s and 1990s:
The big purchase of the month
It was a family event. Since food prices were constantly rising, the best deal was to go to the supermarket right after receiving your paycheck and fill a cart or two with everything you needed for the next month or months.
For those who could afford it, this purchase supplied the pantry with food and cleaning products.
A very coveted asset at the time was the freezer – even better if it was the horizontal one, used in commercial establishments – to buy meat in large quantities and store it.
Labeling machines
The constant markdown of prices in supermarkets was a challenge in itself.
Barcodes were not yet widespread, and the country had a market reserve for the national computer industry that made it difficult for retailers to digitize their systems.
Price tags were attached directly to the products. As they were always going up, this was a permanent activity, which required a specific employee: the price rescheduler.
“It was a hated profession. The guy came with the machine in his hand and didn’t stop, he went from one sector to another”, remembers Carlos Eduardo de Oliveira, 67 years old, former Banespa employee.
Bank juggling
Brazilians have a reputation for being creative in the face of adversity, and this applied to their relationship with bank accounts and financial products.
Many people had more than one savings account, with anniversary dates on different days. When it was necessary to make a withdrawal, it was done from the account whose anniversary was closest – minimizing the loss of profitability. The same was true for the variety of credit cards, also with different expiration dates.
High inflation led workers to pressure companies to pay their salaries in more than one monthly installment. Receiving salaries every two weeks or every week was a goal sought by unions, and in some cases this was achieved.
Among the highest-paid employees, some also chose to buy dollars as soon as they received their pay, to exchange them as needed.
Price tax and lack of products
Price control was one of the many strategies used to try to combat inflation, as occurred in the Plano Cruzado in 1986, during the José Sarney government.
Food items, fuel, cleaning products and services had their prices frozen, and the president asked Brazilians to monitor prices in supermarkets and report markdowns.
Some people went to supermarkets wearing a pin saying they were “Sarney’s inspector”. In some cases, this led to arguments with shopkeepers and confusion, which ended with business owners being arrested and establishments being closed down.
It didn’t work. Soon there was a shortage of products, either because the frozen prices were not enough to encourage production or because retailers decided to take items off the shelves. Traders also started charging a premium to sell some scarce products – only those who paid the extra could have access to them.
The price freeze was not the only trigger for product shortages. Long-term storage and the challenge of maintaining stable supply chains also caused constant shortages. Oliveira reports that, in Santos, it was common to see people queuing up at the supermarket as early as 5am on days when meat was available. “Often the police had to intervene to organize,” he says.
A similar problem occurred with fuels. Petrobras had a monopoly on refining and sales, and the government exercised complete control over prices. When the price increase was announced, many people rushed to gas stations to fill up their tanks, which created long lines of vehicles that stretched around blocks.
Another trauma of the time is the confiscation of savings. This occurred in March 1990, at the beginning of the Fernando Collor government, and affected not only savings accounts, but also investments and current accounts.
The measure blocked deposits of more than 50,000 new cruzados (equivalent to R$13,200 adjusted by the IPCA), which could only be withdrawn after 18 months. The drastic measure caused acute problems for many families and companies.
Is the price high or low?
Price re-marking did not occur uniformly across all products and companies, which led to large differences between establishments or absurd comparisons.
In the book Saga brasileira – a longa luta de um povo por sua moeda, journalist Miriam Leitão records some of these examples. In the same week, the same vacuum cleaner could cost 899 new cruzados or 2,009 new cruzados, depending on the store.
A newspaper reader complained that he had bought a meter of elastic in one store for 14 new Cruzados, and the next day he had found the same product in another store for 1.50 new Cruzados.
Price misalignment and high inflation forced consumers to do a lot of research and always do the math before buying something. In the book, Leitão reports that newspapers brought tables to guide people in their decisions: “If the store offered ‘only’ a 30% discount in cash, it would be better to pay with a card – which was not considered cash – and lose the discount. and invest in overnight, which at the end of the month had already exceeded 80%” – overnight was an investment with daily profitability offered by banks.
To deal with all these bills, a calculating machine could not be missing. At the item’s largest producer at the time, Dismac, sales doubled from 1988 to 1989.
“The telephone was also a weapon to make the best purchase. If that were the case, we would hit the hammer and go get it immediately”, says Oliveira.
Purchase by consortium
As purchasing in installments was unfeasible due to the unpredictability of inflation, purchasing through a consortium became popular, especially for the acquisition of goods such as cars and apartments.
This modality still exists today, with less reach. Interested parties join a consortium to buy, for example, a car, and deposit a certain amount monthly into a common fund with income. Periodic draws are then held in which parties can place bids to receive the good.
Oliveira says that in the 1980s and 1990s there were many scams and bankruptcies of consortium companies – to the detriment of participants –, which subsequently forced stricter regulation of the activity by the Central Bank.
Short horizon for companies
High inflation was a problem for business decisions. Planning costs and expenses was a challenge with hints of guesswork. Keeping the money invested in daily profitable applications could seem much more reasonable than risking investing it in research or business expansion.
Having a large stock of products was a common objective, as they would not lose value over time – although this reduces the efficiency of the operation, as having large stocks generates extra storage and management costs and immobilizes resources that could be used in business expansion or sales efforts.
Installment sales in many cases proved to be a bad business, even with interest charges and the drive to dump goods. With rampant inflation, getting paid in thirty days could mean losing money.
Setting prices was a particular nightmare. Businessman Oded Grajew, then owner of the toy company Grow, quoted by Leitão, said that his biggest challenge was creating and updating the price list, at the risk of making products unsold or putting the company in the red.
In the pre-internet era, printed catalogs were an effective way to reach a large number of potential consumers. But publishing the price of a product on printed paper was also a danger, even if it indicated a deadline for the promotion. Large retailers gave up on the catalog in the most acute moments of inflation, despite the sales potential.
#life #Real #Plan