Understand how the rise in worldwide inflation may affect e-commerce in Brazil.
Gas prices had an 18% increase in the last couple of weeks in Brazil – an adjustment to a price that was already high due to inflation, currently at 10.6% in the country. The spike is a consequence of the conflict between Russia and Ukraine, which has caused crude oil prices to rise.
The rise impacts many areas of the economy – both local and international – including e-commerce. Businesses of all sizes will be influenced by this huge price hike in fuel – more expensive fuel means that freight prices increase too, which is reflected in online prices.
According to EcomCrew, e-commerce inflation is caused “by a number of factors, but most of them revolve around a distressed supply chain infrastructure. The most obvious culprit, of course, is COVID-19, which, in hindsight, was the first domino that fell and set everything in motion, leading up to this ongoing crisis.”
Read more: Brazil in 2022 – An Overview of the Market
The global economy, as well as the Brazilian one, has been dealing with an economic crisis since the pandemic hit the world. But we have found ways to turn sour lemons into lemonade. Despite the scenario of uncertainty, Brazil holds a forecast of e-commerce growth of 34% by the end of 2022 and a 56% increase by 2024.
The main reasons for that are the large adoption of e-wallets, the expansion of instant payment methods such as Pix and payment links, and dollar drop.
Race to the Dollar
With the continual increase in the basic interest rate (Selic) by the Central Bank, Brazil becomes a more attractive country for foreign investment. As the dollar drops, Brazilians go running to buy dollar bills.
Some of the biggest Brazilian banks revealed a higher demand for both the US dollar and the Euro in the last month – Bradesco shared a 500% spike compared with February 2021.
For e-commerce, it means that the Brazilian consumer is willing to purchase multinational products as they get more accessible. If you’re a cross-border merchant looking to expand your business into Brazil or grow your business already established in the country, you can partner up with a PSP specialist in the Brazilian market. Get in touch with our team, and let us know how we can help!