Posted on 06/01/2023 05:58 / Updated on 06/01/2023 10:43
(credit: Marcelo Ferreira/CB/DA Press)
The new minimum wage of R$ 1,320 is in effect. The amount, despite being 7.43% higher than the 2022 value, is still not sufficient to cover basic household expenses. In the Federal District, 82.7% of them are in debt, according to a survey by the National Confederation of Commerce of Goods, Services and Tourism (CNC). According to the Inter-union Department of Statistics and Economic Studies (Dieese), the ideal value of the minimum wage to cover basic family expenses, without going into debt, would be R$ 6,575.30. Basic trash, IPTU, IPVA, cooking gas, school supplies, etc. are examples of expenses that will increase, making it even more difficult to fit monthly expenses into the middle-class household budget. Economists warn that using revolving credit cards can be a trap.
According to economist and financial educator Francisco Rodrigues, low-income workers commit about 59.4% of their budget to food, which ends up eroding their purchasing power. “The budgets of low-income households are still very tight. High interest rates and inflation further increase household expenses,” said the specialist. “People are delaying basic bills, like water and electricity. The worker ends up being forced to choose what to buy and what to pay, because the minimum wage wasn’t enough to cover all expenses,” noted Francisco.
The poorest population suffers most from the effects of high prices. Transportation assistant Erismar dos Santos, 25, has a family of five, and when everyone’s income is combined, the total family budget at the end of the month is R$2,000. According to him, who lives in Estrucural, the amount is not enough to cover all expenses. “We manage. But, lately, it hasn’t even been enough to buy all the essential groceries,” Erismar said. Also, the transport assistant is in debt. “I try to put in extra hours at work to cover expenses and pay off debts. Nowadays, I use between 70% and 80% of my salary just to pay off debts,” he said. Erismar believes the new government will help improve his life. “I am confident that the new president will take care of the people most in need,” he said.
According to the latest Consumer Indebtedness and Default Survey (PEIC) published in November 2022 by the CNC, 82.7% of households in the Federal District are in debt. “This not only worries consumers, but also creates difficulties for companies, which are unable to sell or pay suppliers, due to insolvency. It is a vicious circle that needs to improve a lot”, analyzes the economist, professor at the ‘University of Brasilia (UnB) and councilor of the Regional Economic Council (Corecon) César Bergo. “The most important thing is to have discipline and patience when budgeting,” suggests the professional.
The population must also prepare for the increase in the Tax on the Circulation of Goods and Services (ICMS) is a rate which is adjusted annually and which interferes in the values of energy, telephony, transport and fuel tariffs. Even when an item doesn’t change in ICMS, other products end up being affected. “Health care plans are going up and so are the taxes that are usually paid at the beginning of the year. In fact, only the minimum wage does not cover it”, observes the economist César Bergo. “Debt is reaching its peak. This is worrying. Households are at the edge of their debt. They cannot get credit, as many of them have restricted names on the market,” added the specialist.
Structural resident Esmeralda Taveira, 61, and her husband, Ivanildo Januário, 64, live on an amount of R$ 1,100, referred to the woman’s retirement. But, to obtain the benefit, the couple had to hire a lawyer and R$ 300 a month must be withdrawn to pay the professional’s fees. “The deal was that I would spend two years paying for it,” explained the retiree. In addition to the monthly payment of professional and basic expenses, Mrs. Esmeralda still occasionally has to pay for some medicines she needs, not always finding them in expensive pharmacies. “When I go to the market, I can’t always buy everything I need. Some days I can’t even buy food,” she said.
Dieese conducts a monthly survey in which it raises the price of around 12 items to estimate the value of the staple food basket in some capital cities. According to the latest survey, published in December 2022, the value of the basic food basket in Brasilia is R$ 712.20, having presented an accumulated variation of 14.58% over the year.
The National Electricity Agency (Aneel), responsible for regulating the electricity sector in the country, has defined that, starting last November 3, 2022, customers served by Neoenergia Brasília would have new electricity rates. The average impact of the fare adjustment, which includes exemptions that reduce the ICMS calculation basis, was 11%. This percentage represents the average readjustment for residential and commercial customers.
The property and land tax (IPTU) and the motor vehicle ownership tax (IPVA) will also increase. The Legislative Chamber of the Federal District (CLDF) approved, in December 2022, a 5.97% adjustment for both taxes.
The 2022 Annual Tariff Adjustment (RTA) for public water supply and sewerage services provided by the DF Environmental Sanitation Company (CAESB), defined on the basis of calculations made by the DF Water, Energy and Basic Sanitation Regulatory Agency (ADASA), is 9.64% for the residential category and 7.46% for the non-residential category. The annual adjustment came into effect on 1 January 2023.
The revolving credit card — which consists of the minimum payment of the invoice — and the use of the overdraft are subterfuges that can help in the short term, but they are real pitfalls, according to specialists. According to economist and financial advisor Francisco Rodrigues, more than 84% of the population is in debt mainly due to revolving credit cards.
There was a 14.45% increase in the revolving credit card rate, compared to the same period in 2021. With that, the annual credit card interest rate averages 377% per year. In some banks, this rate costs more than 685.99% per annum. The revolving credit card is the most expensive type of credit on the market. Second is the overdraft, which has increased by 8.16% over the past year, compared to 2021. With that, the annual interest rate on the overdraft averages 147% per annum. In some banks this rate costs more than 160% per annum.
According to Francisco Rodrigues, adjustments in the prices of medicines and in the values of health plans are expected from the months of March and April. “Plans are trying to compensate for the losses suffered during the covid-19 pandemic. Ideally, people are looking for new and cheaper alternatives, before health plans announce increases,” Francisco suggested.
Collaborated with Carlos Silva*
Intern under the supervision of José Carlos Vieira
Coverage of the Brazilian Correio
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Tips for organizing yourself financially
By Francisco Rodrigues, economist, financial advisor and speaker
Extra effort to say no to some expenses
Start saving at least 10% of your monthly income
Renegotiate the value of what you’ve already bought
Set a monthly credit card spending limit and be disciplined with your decision
Prioritize debt payments
Don’t share expenses with food and fuel
Solutions to get out of the red
*By Francisco Rodrigues, economist, financial advisor and speaker
1) Make an extra effort to say no to some expenses
2) Start saving at least 10% of your monthly income
3) Renegotiate the value of what you’ve already bought
4) Set a monthly credit card spending limit and be disciplined with the decision
5) Prioritize debt payments
6) Do not install food and fuel expenses in installments
Extended National Consumer Price Index (HICP): Monthly change accumulated over 12 months
Month: November 2022 / Source: IBGE
Food and drink 11.84%
Health and personal care
Elementary education 8.77%
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