Yes, in proportion to local salaries, Brazil is expensive, whether in a big city or in the countryside. Most of Brazilians earn around USD 2 or USD 3 per hour while the groceries at supermarkets cost about 30% less than what you would pay in Canada, the USA, or in the UK. For locals, real life is a struggle to pay the groceries and the rent. At the supermarket, you don’t buy too many things at USD 100,00, believe it or not.
So, don’t expect similar prices to Colombia, Peru, Bolivia, Mexico, or Eastern Europe, and no way the prices of Southeast Asian backpacking destinations. Even if you arrive carrying a strong currency and are used to the expensive cost of living, you will feel shocked many times by the gap between what you pay and what you get. Sure you find high-quality services, especially in metropolitan areas but the overall combination of criminality, logistical bottleneck, bureaucracies, and the language barrier is not worth it.
Despite the Brazilian Real values being less than USD and Euro, your cost of living in Brazil is likely to be higher than in Portugal and Spain, for example. In major cities, the rent is expensive so as many facilities in your country may be cheap or affordable. And for every public service that is not properly delivered, you need to hire a private service, as in the case of education, language learning, healthcare, private security, transportation, and so on.
Compared to other countries where I have been, the cost of living in Brazil is similar to Russia and Estonia. Of course, it depends on how you live and what areas since living in a fancy neighborhood is as pricey as living in Scandinavia or in New York City. In any case, life in Brazil is affordable for those coming with strong currency but not with the same cost-benefit you can get in other Latin American countries.
How can travelers skip high costs in Brazil?
Prices in big cities and tourist areas are absurdly expensive but we must remember that Brazil is not only Rio de Janeiro and São Paulo. Leaving the metropolitan areas, you find options in medium-sized and small cities where life is cheaper and safer and infrastructure is reasonable.
For digital nomads and travelers willing to stay in Brazil for a while, the best option is to settle in medium cities and other state capitals rather than São Paulo and Rio de Janeiro. The countryside of the states of São Paulo, Paraná, Santa Catarina, and Rio Grande do Sul has interesting cities that demystify a lot of stereotypes about Brazil.
While renting a tiny apartment in Rio de Janeiro starts from about USD 500, you find decent apartments and accommodation options outside of the metropolitan areas for this price. There are coastal cities much better, safer, and cheaper than Rio to live in during your Brazilian trip. Florianópolis, Balneário Camboriú, Imbituba, and Garopaba in the state of Santa Catarina are some of the places I recommend searching for.
An important point to pay attention to is that the high season in the coastal regions is during the summer from December until the carnival (February or March), hitting the peaks during the Christmas and New Year holidays when every hostel, hotel, and all accommodation options sell out in advance.
For groceries, the cheapest option is to avoid supermarkets and stores in fancy areas, where prices are higher. For eating outside, the cheapest option is to look for restaurants that serve “prato feito”, PF as also said in Portuguese. A prato feito usually costs around USD 5 or USD 6.
If you plan to travel to several regions across Brazil, prepare for expensive flight tickets. You won’t find flights for 50 bucks even for a 1-hour distance unless you buy in advance. The closer to the flight departure, the sky is the limit. In the worst-case scenario, the option is to travel by bus, even if it takes over a day of the trip, as many Brazilians end up doing.
Another recommendation is to use a global SIM Card if possible or take advantage of the deal offered by your telecom company. Mobile and telecom services in Brazil are backward comparing the standards of Western Europe and pricey for the quality of its services.
Why Brazil is expensive?
This a question that I have always heard from travelers and any foreigner who has lived in the country, although costs in Uruguay and Chile are also high if compared to other countries in South America. Even foreigners arriving with strong currencies such as the US dollar, British Pound, Euro, and Australian Dollar can’t escape the ‘Brazil Cost’ despite their value more than the Brazilian Real.
The Big Mac Index is not an accurate indicator of the cost of living in Brazil since McDonald’s targets middle-class and upper-middle-class consumers from urban areas. Brazil’s Cost is a result of excessive taxes, protectionism, high import tariffs, outdated labor laws, and pointless bureaucracies, combined with the monopolies and oligopolies charging high-profit margins that are unacceptable in any competitive market.
Add an abundant number of huge government departments employing millions of bureaucrats at federal, state, and municipal levels who receive higher salaries than the ones paid in the private sector, including useless jobs that only fit government rules interfering in every aspect of businesses and social life. After 30 years (for women) and 35 years (for men) of working, they retire receiving higher pension checks. Who pays their salaries, pensions, and benefits? The taxpayers, so all the government levels put themselves under an obligation to raise as much as possible from the local middle class suffocated by every government expense. In the end, at least 50% of government budgets are compromised to pay salaries and pensions.
The result is an isolated economy where prices are higher than most of the developed countries, lower quality standards, lower salaries, and consumers have fewer options to buy since the local market players in every industry are either acquired by a big winner that takes all or get bankrupt. Brazilians earn less than Americans, British, Australians, New Zealanders, and Canadians but end up paying more for nearly everything, especially for imported goods and products quoted under international prices, including commodities. Not a surprise why Brazilians spend a lot when going abroad due to the possibility to buy electronics, clothing, liquor, and many other items at cheaper prices. Quite often, electronics in Brazil cost twice or three times more than in the USA, even if comparing prices in US dollars.
In order to give an overview of what is behind Brazil’s Cost and the instability the country has been facing throughout the 20th century, we must observe the following factors that summarize Brazilian political, economic, and social life.
Oligarchical Structure
Since the 19th century, the Brazilian economy has been controlled by oligarchies running half a dozen companies that monopolize the important economic sectors plus state companies and banks behind almost everything produced in the country from beers to steaks to coffee. The result is fewer market players, less competition, and higher prices connected to political lobbies that create market barriers for new players. No government in Brazil has maintained a minimum of political stability without a close relationship with the leading oligarchies.
Outdated Labor Laws
The current Brazilian labor laws date back to the 1930s when the country was governed by Getúlio Vargas under the inspiration of the Nazi-fascism regime. Strongly favorable to the employees, such laws turn hiring and firing costly for the companies, and impose lots of regulations that make impossible a flexible negotiation between employers and employees. For a single bureaucratic detail, employees can run a lawsuit against the companies, whose financial situation gets easily threatened by any judicial trouble.
Once a boss has received a lawsuit, he never trusts employees anymore. Therefore, employers impose a lot of expectations regarding results versus the costs of salary and social insurance, offering no space for inexperienced workers to learn new skills. Fewer jobs are created and workers find a limited number of opportunities, in a vicious cycle where he doesn’t get a better job because he doesn’t have experience, and he doesn’t get experience because there are few opportunities. Working informally ends up being the alternative for many small businesses to survive.
Corruption and Mistrust
If you live in a society with high levels of corruption, you’re not likely to trust people outside your intimate circles and institutions. That’s what you notice among Brazilians in their daily life dealing with countless bureaucracies and regulations unless you are just a tourist. But if you’re living in Brazil, even for a short time, you’ll face lots of regulations requiring you proofs that you’re an honest citizen, costing you expressive sums of cash and time wasted among queues, government departments, and at the cartórios, where you go to pay for simple stamps and certifications valid for a limited period – so you need to pay again once it expires. Depending on where you live, you must pay even “security fees” for criminals and paramilitary militias as happens in many areas in Rio de Janeiro. Big companies and investors often pay bribes along the long bureaucratic pipeline, which in the end will result in higher prices for customers.
Low Quality of Public Services
Alongside the corruption that drains public resources, for every public service poorly delivered, when not delivered at all, you must hire a private service after spending the same percentage of your income paying taxes as in Western Europe. You need to pay for alarm and security services at your home, car insurance, healthcare insurance, school and language courses for your children, and so on. Having a family in a big city is likely to cost the same as living in any expensive city around the world.
High Import Tariffs
Brazil’s economy is based on agribusiness, basically, exporting commodities. Since the country doesn’t produce technology, many products must be imported, including machines, tools, and electronics. In addition to the high import tariffs, every product in Brazil has been taxed along all the cycles from the manufacturing (or importing) through all the commercialization phases until the final customer. Don’t even ask how is the calculation of the import tariffs and what are the criteria…
Cost of Logistics
Despite its continental dimensions, the logistics in Brazil concentrate on road transport. The grains produced in the Center-West, the imported goods arriving in São Paulo and Rio de Janeiro, everything moves around the country by trucks driving all kinds of roads from mediocre ones to terrible muddy ways in the remotest areas – although it has improved last year. Due to the monopolies and strict regulations, aerial, railway, river, and sea transportation haven’t been explored yet plus all the challenges to address regarding infrastructure and all the costs to operate in Brazil.
Credit and Installments
After decades of inflation (overcome in 1994), Brazilians have gotten used to living in debt and negotiating credits despite the absurd interest rates, also due to monopolies. When you walk through any commercial area in Brazil, you see prices of the showcased products promoted including the price in cash and in installments of 5 times, 10 times, or 12 times. In the case of high-value items, the installments go up to 4 years for cars or up to 20 years for houses. Paying in installments is a sacred rule for retailers operating in Brazil, otherwise, you don’t sell anything from clothes to mobile phones. How does a Brazilian worker who earns between USD 300,00 and USD 600,00 will buy a USD 1,000 mobile phone, for example? Retailers in Brazil have developed sophisticated processes for credit and payment facilities depending on the buyer’s credit scores, economic situation, and job status, and avoiding fraud.
How shocked are you right now? Surviving in Brazil is an art and the high cost of living is usually the main complaint I have heard from foreigners who visit the country.
Originally posted 2023-01-15 23:21:36.
