Why Is Everything So Expensive In Brazil? By Sergio

Although I resided in Brazil for the majority of my life, I now live in the United States. It

has become easy to notice how much more expensive products are in Brazil compared

to many other countries in the world. Some of the factors for the extravagantly higher

prices are due to high taxes, economic inefficiencies, and Brazilians’ disposition to

spend as well as display such costly items. Brazilians’ willingness to pay excessively for

products is evident. In the case of the recently released PS4 game console, in the

United States this new and improved top of the line gaming device will cost gamers

$399. However, for the average Brazilian the new PlayStation console will cost an

astonishing 4,000 Brazilians Reais, which equates to approximately $1,850 dollars. This

total price is enough for a willing consumer to purchase a round trip ticket from Brazil to

Miami and still clear costumes in Brazil with the new console.

Another sad reality of how expensive automobiles can be in Brazil. Currently a

Volkswagen Gol, which is a popular automobile produced entirely in Brazil and targeted

toward low and middle income consumers, will cost 37,000 Reais. In Mexico, the same

model will cost a total of 23,000 Reais. Also in Mexico, a sporty Chevy Camero in will

cost 65,000 Reais, whereas in Brazil this same car will cost 190,000 Reais, almost three

times the cost for the same car.

Many other examples could be mentioned showing how expensive products are in

Brazil compared to the same equivalent in other countries. Thus, it begs the question

from most Brazilians who are aware of these price differences: Why are prices so

expensive in Brazil? It is a complicated matter that has consumers trying to make sense

of it all. As mentioned above one of the dominant reasons for the higher prices in Brazil

are the taxes imposed by government to fund social security benefits and welfare. For

the PS4, from the $1,850 total price in Brazil, $445 is for federal taxes, $147 for federal

social taxes and $446 for state taxes for the imported product. The prices in Brazil are

also influenced by the current state of the country’s infrastructure, especially the

transportation system. Railroad lines in Brazil have not been significantly developed

since its Monarchy days, which was in the mid 1800’s. This inefficiency raises

transportation costs and consequently causes consumers to bear the higher prices on

products.

Therefore, in order for the average consumer to have purchasing power despite such

high cost of products, banks and retailers provide attractive interest free payment plans.

In this way, consumers are able to make 6 to 12 monthly payments for products that

they could not otherwise afford, though often compromising great part of their monthly

salaries. Regardless of the high prices, Brazilians ultimately adapt and become unfazed

by such reality.

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