Brazil Considers Tax Cuts Amid Rising Food Inflation Fueled by Dollar and Climate Change

Brazil is grappling with elevated food and beverage inflation, reaching 7% in the 12 months leading up to February, according to IBGE data. Experts attribute this surge to factors including the dollar's appreciation and climate change, creating a "perfect storm." The rising dollar, which increased by approximately 24% in 2024, has made imported food items more expensive. The government is considering tax cuts on items like sugar, corn, and meat to mitigate the impact. Vice-President Geraldo Alckmin anticipates improved agricultural forecasts for 2025, with a nearly 10% increase in crop growth expected. Climate change, particularly the El Niño phenomenon, has also significantly contributed to rising food prices. A study by LCA consultancy estimated that El Niño accounted for 2.25 percentage points of the 8.22% inflation in household food in 2024. Certain fruits and vegetables, such as tangerines, avocados, lemons, and zucchini, have experienced substantial price increases due to adverse weather conditions.