In The Wake Of Brazil's Boom, Prices To Match Over the past few years, incomes in Brazil rose and unemployment plunged to record lows. But now — as the country prepares to host the World Cup and the Olympics — the numbers are changing. Growth is slowing and inflation is creeping up. Tourists and Brazilians alike are feeling the pinch.

In The Wake Of Brazil's Boom, Prices To Match

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If a country is named host of the Olympics or the World Cup, it's a big deal. Brazil will be hosting both events over the next three years, and that means a massive influx of foreign visitors. Now, this is a country where fears about crime usually grab the headlines. But as NPR's South American correspondent Lourdes Garcia-Navarro reports from Sao Paolo, tourists coming to Brazil may be clutching their wallets for a different reason.

LOURDES GARCIA-NAVARRO, BYLINE: So I'm at a Starbucks in Sao Paulo, and it looks like it would in the America. It has the same jazzy music. It has the same things on offer. There's one thing that is very different, though, and those are the prices.

THIERRY: Everybody told me it was expensive, but when you see it yourself, it's shocking.

GARCIA-NAVARRO: Thierry is from Geneva, and he's in town for a wedding. He's lining up to get a drink here at Starbucks, and to give you an idea, it's almost $6 for the biggest-size chai latte. Over the weekend, a magazine here posed the question: Does Sao Paulo have the most expensive pizza in the world? The answer was yes. An average pie here will run you 30 to $40. A pair of name-brand running shoes are $150 to $300.

Thierry warns those coming from outside the country better start saving now.

THIERRY: They will have to count really well their money. You have to come with a, yeah, with a wallet full of money.

GARCIA-NAVARRO: It's not just visitors who are astounded by rising prices here. Over the past few years, Brazil boomed. Incomes rose, and unemployment plunged to record lows. But the numbers are changing. Growth is slowing and inflation is creeping up. The cost of food, especially, has jumped in the past year.

SIMONE CAMARGO DA SILVA: (Foreign language spoken)

GARCIA-NAVARRO: Simone Camargo da Silva is a 35-year-old student who is shopping at a food market in central Sao Paulo. She jokes that tomatoes and onions are the price of gold.

SILVA: (Foreign language spoken)

GARCIA-NAVARRO: She says: I'm worried about inflation. It keeps rising, and we don't know when it's going to stop. Brazil has a bitter history with rising prices. It suffered hyperinflation in the 1980s and '90s, so the population here casts a wary eye on any swing in the cost of goods. And swinging they are: Tomatoes have gone up 122 percent since last year, potatoes 97 percent, onions some 76 percent. The prices of services, too, have skyrocketed: haircuts, vacations, you name it.

ROBERT DUMAS: I'm Robert Dumas. I work at INSPER.

GARCIA-NAVARRO: Dumas is an expert on the Brazilian economy at the Institute of Education and Research.

DUMAS: Absolutely bad numbers, because for the last 12 months, we've reached an inflation of around 6.6 percent.

GARCIA-NAVARRO: That's breaching the government's target rate of 6.5 percent. Dumas says there are a number of reasons for big price tags in Brazil: high taxes, poor infrastructure. But the main one is...

DUMAS: Demand is booming. So the purchasing power of the Brazilian is increasing.

GARCIA-NAVARRO: So much so that Brazilians regularly fly to the U.S. to shop and take advantage of the low prices there. American Airlines, for example, has a special exemption on its flights to Brazil. Passengers can take up to five 70-pound bags, and most Brazilians fill up the quota.

Dumas says, though, what Brazil needs now is more investment and less consumption. He also says the central bank needs to raise interest rates, something it hasn't wanted to do. Here at home, some Brazilians, though, are taking matters into their own hands.

AUGUSTO CORDERO DE MELLO: You can't imagine how good is my tomato sauce.

GARCIA-NAVARRO: That's Augusto Cordero de Mello, who runs Nello's restaurant in Sao Paulo. Despite his mastery of tomato sauce, this Italian eatery recently took tomatoes completely off the menu after the price went astral.

MELLO: And we decided not to buy the tomato at an absurd price, and to try to avoid using the tomato here.

GARCIA-NAVARRO: But that's hard with an Italian restaurant.

MELLO: Very hard. It was hard.

GARCIA-NAVARRO: He says tomatoes are back on the menu for now, but he won't hesitate to take them off again if the price isn't right. Lourdes Garcia-Navarro, NPR News, Sao Paulo.

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