Researcher shows food inflation is multifactorial and points to paths for securing domestic supply and controlling prices
Over the past two decades, food inflation in Brazil ran roughly 60% above overall inflation. Among the products with the steepest price increases are fruits (180%) and tubers, roots, and vegetables (90%). On supermarket shelves, the category least affected by price hikes has been ultra-processed foods.
That is the finding of Food Inflation in Brazil: a structural, specific and systemic phenomenon, released this Tuesday (31). Developed by economist Valter Palmieri Júnior in partnership with ACT Health Promotion, the study offers both a diagnosis and a course of treatment for Brazil’s chronic condition of rising food prices.
He conducted the research over the course of a year, focusing especially on the causes of inflation. “If we don’t properly identify the problem, even with good intentions, we might make it worse, just like in medicine. Depending on the condition, a well-intentioned person might prescribe something that actually worsens it,” he says.
“Normally, inflation in a given period is explained by one factor, and in another moment by another factor: ‘cocoa prices rose because of a climate event.’ ‘Something happened with the exchange rate and that affected inflation for certain products,’” he explains. “In my work, inflation is multisystemic. Of course, sometimes one variable or factor is more dominant, but it always operates within an integrated system of multiple factors,” he adds.
In this framework, the study identifies five causes of food inflation: the export-oriented agricultural model; market concentration; public policies that prioritize exports and weaken domestic supply; structural inequalities; and climate change.
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Beyond mapping the interdependence of inflationary factors, Palmieri Júnior introduces the concept of invisible inflation. Shrinkflation—when price remains the same but product weight decreases—is already accounted for by standard calculation methods. Invisible inflation is more complex: it applies to products that may have held the same weight and price, but whose quality has quietly deteriorated. “The decline happens across three levels of quality. First, environmental, because it is increasingly linked to productive monotony. Second, public health, because as ingredient quality falls, producers must resort to even more additives and flavorings. And third, sensory, the taste gets worse,” he says.
As an example, Palmieri Júnior cites ice cream, which has become cheaper to produce through the replacement of milk fat with vegetable fats. “If I reduce quality but keep the final price the same for the consumer, it seems like there was no inflation in the classical sense. That’s why I’m calling it invisible inflation.” This quality decline is what turns products that could simply be industrialized into ultra-processed ones, replacing whole or culinary ingredients, such as real fruit or cocoa, with artificial flavorings.
In the case of ultra-processed foods, which had smaller price increases, substitution happens only in profit margins, since the sensory quality and the public health impact remain the same. The perverse effect is that lower-income populations end up with access to worse products.
Prices of ultra-processed foods fluctuate less because they rely on a set of cheap, interchangeable compounds derived from fragmented ingredients. “[The industry] benefits from the low cost of mass-produced agricultural inputs. To produce margarine, for instance, I can use the cheapest agricultural output to extract fat. Then I ultra-process it with flavorings and additives to create a product also made at scale, cheaper than butter,” he explains.
Causes of food inflation
The expansion of the export agribusiness sector is one driver of rising prices. In 25 years, Brazil multiplied its commodity exports by 19. The growth of this type of production creates competition for agricultural land that could otherwise be used to grow food.
Some commodities, such as beef and coffee, are also consumed domestically. But this does not guarantee price control. Since these goods can be sold abroad in dollars, the US currency becomes a reference for domestic prices. When the Brazilian real depreciates, prices rise.
The second factor is market concentration across the entire food chain. Oligopolies exist from the very beginning, in the supply of agricultural inputs, all the way to the consumer end, in supermarkets. This allows companies to influence prices, by buying from suppliers at lower prices and selling to consumers at higher ones, increasing profit margins. Low competition also enables companies to set standards for the chain and introduce products of varying quality, capturing multiple consumer segments. This is where invisible inflation occurs.
The set of public policies favoring the export model is the third factor highlighted in the study. Brazil has a legal framework that encourages this type of production, including the Kandir Law, which exempts raw exported goods from ICMS tax, and tax exemptions for sectors such as soft drinks and soy. This is combined with the weakening of the National Supply Company (Conab) and the Supply Centers (Ceasas) in recent years.
Another issue is structural inequality—social, territorial, and income-based—which is chronic in Brazil. Lower-income families spend a larger share of their budgets on food, so any price increase hits them disproportionately. On the territorial level, access to food depends on logistics and infrastructure: prices tend to be higher in areas with fewer supply options. Favelas, for example, have fewer street markets and grocery stores and more shops with higher prices and limited selection of fresh and minimally processed foods, undermining food and nutritional security.
As a result, ultra-processed foods gain space because their prices are more stable and they can be stored. But the apparent savings come later, with higher rates of chronic non-communicable diseases such as type 2 diabetes and cardiovascular problems.
Finally, the study identifies climate change as another factor increasing food costs. Climatic unpredictability disrupts agricultural production and, therefore, prices. This is directly linked to the first factor: as commodity production expands, environmental resilience declines, making extreme events more frequent and severe, leading to production losses and higher prices.
At the same time, the expansion of agricultural frontiers affects the production of staple foods such as rice, beans, and cassava. Increasing the area and volume of more diverse, decentralized, and autonomous production systems (not dependent on industrial inputs such as seeds, fertilizers, and pesticides) can help stabilize food production and, consequently, prices.
Paths to reduce food prices
The recipe for reducing and stabilizing healthy food price is also a set of five interconnected strategies, with emphasis on public policy and a shift in government approach. “The State acts reactively rather than preventively, without a regulatory agenda that restricts certain activities and production, only providing emergency responses,” the study states.
One step is democratizing access to land, with land regularization and support for the production of staple foods. This would include lower interest rates for food production, stronger public technical assistance, and policies supporting rural succession and valuing agricultural labor.
The study also calls for integration with domestic supply policies, strengthening Conab and Ceasas, expanding institutional purchasing programs such as the Food Acquisition Program (PAA) and the National School Feeding Program (Pnae), and prioritizing domestic supply through mechanisms that prevent agricultural production from being driven solely by free-market logic.
There is also a need to coordinate agricultural policies to reduce production costs. “The rise in exports has driven up imports of fertilizers and pesticides, chemical agricultural inputs in general. And that has raised production costs even for farmers who don’t export. The cost of producing beans, for example, has risen shockingly because the price of all agricultural inputs has gone up so much,” Palmieri Júnior explains. Add in the advantages extended to agribusiness, tax exemptions and easier access to rural credit, and farmers rationally choose to produce what is most profitable: commodities.
Another way to reduce prices is to diversify production and transition to sustainable agricultural systems such as agroecology. This would require tax incentives for both production and consumption, making healthy foods, central to the Brazilian diet, more affordable.
In the end, the study emphasizes the need to decentralize food processing chains by supporting small and medium agro-industries that serve local markets, and to expand and improve food and nutrition security infrastructure in cities, such as street markets and municipal markets, with minimal intermediaries between producers and consumers.