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Economist: Impossible to ignore high prices in Brazil

July 23, 2013 at 11:18 AM   |   Comments

RIO DE JANEIRO, July 23 (UPI) -- Brazilians who can't afford to travel abroad to purchase cheaper goods are finding it hard to deal with the country's sky-high prices, an economist said.

Luciano Sobral, a partner in a Sao Paulo asset management firm, writes an irreverent economic blog under the name "the Drunkeynesian."

Sobral told The New York Times that the Brazilian commodities boom has ended and the country is on the verge of recession.

"This is making it impossible to ignore the high prices which plague Brazilians," he said. The country's inflation rate is 6.4 percent.

In Brazil a large cheese pizza costs $30 while the cheapest baby crib sells for more than six times the cost of a similarly made item at IKEA in the United States.

Brazil's high prices result from a number of factors but much of the blame has been placed on a tax system that prioritizes consumption taxes over income taxes.

Loopholes enable the rich to avoid taxation on dividend income while partners in private companies are taxed at a much lower rate than many regular employers.

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