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SAO PAULO: From the butcher\u2019s shop where he works near Sao Paulo\u2019s historic center, Kleyton Zacarioto says customer traffic has been slowing for years thanks, he says, to a long period of rising food prices.<\/strong><\/p>\n The prolonged squeeze on household \u200bbudgets has turned the 39-year-old against leftist President Luiz Inacio Lula da Silva\u2019s bid for a fourth term in next month\u2019s election. Zacarioto says Lula is the only candidate he knows he will \u200cnot vote for, though he recognized the president \u201cdid good things\u201d when he was first in office in the 2000s.<\/span><\/p>\n \u201cSomeone who earns a minimum wage has no way to get ahead,\u201d he said.<\/span><\/p>\n The 80-year-old Lula is asking voters for patience, while touting record-low unemployment, falling inequality, and recent months of easing inflation to argue the economy is better than it seems.<\/span><\/p>\n But Zacarioto\u2019s frustration reflects a challenge that has dogged incumbents around the world since the pandemic: persuading voters that improving economic indicators matter when many still feel squeezed by years of higher prices.<\/span><\/p>\n \u201cI know it\u2019s \u200bstill not great, but I guarantee inflation will stay under control,\u201d Lula promised in a recent campaign spot, saying he knew what it was like to not make end\u2019s meet.<\/span><\/p>\n For months, polls have shown a neck-and-neck race \u200bbetween Lula and Senator Flavio Bolsonaro, the son of former right-wing President Jair Bolsonaro, who was barred from the race after being convicted of an attempted coup.<\/span><\/p>\n Polls suggest the \u2060economy is one of the main reasons Lula has struggled to fend off Senator Bolsonaro.<\/span><\/p>\n Nearly half of Brazilians say the economy has gotten worse in the past year, according to a Quaest poll published in September, compared to just \u200b19% who say the economy improved.<\/span><\/p>\n Senator Bolsonaro has made concerns that paychecks do not stretch as far as they once did a centerpiece of his campaign, frequently contrasting current supermarket prices with those during his father\u2019s presidency.<\/span><\/p>\n Lula\u2019s campaign has pushed \u200bback with a website dubbed \u201cMarket of Lies\u201d to dispute the claims. It has also filed a complaint in the Superior Electoral Court, which oversees elections in Brazil, accusing the senator\u2019s campaign of lying about prices.<\/span><\/p>\n Experts say the debate over the cost of living reflects a gap between improving labor and inflation measures and what many households experience day to day.<\/span><\/p>\n \u201cAll the big figures say that this has been a good government,\u201d said Thomas Traumann, a political analyst and author. \u201cThe fact is that everyday folks just don\u2019t agree with that.\u201d<\/span><\/p>\n Traumann \u200bdrew comparisons to US President Joe Biden\u2019s struggles in 2024 to bridge a disconnect among voters between positive macroeconomic data and negative consumer sentiment, a moment economics commentator Kyla Scanlon dubbed the \u201cvibecession.\u201d<\/span><\/p>\n \u201cThe government has achievements it can point to, but voters \u200bare asking how much of those gains have made it into their own households,\u201d said Felipe Nunes, founder and CEO of the pollster Quaest. \u201cVoters judge the economy by their ability to pay bills, consume goods and services, and achieve their personal goals.\u201d<\/span><\/p>\n Food prices \u200cand rising debt \u2060burdens help explain why many families have seen little improvement in their post-pandemic spending power.<\/span><\/p>\n While food inflation has slowed sharply \u2014 and prices even fell in June to August \u2014 years of steep price increases continue to strain household budgets, with prices remaining well above pre-pandemic levels.<\/span><\/p>\n At the same time, household debt service excluding mortgages reached a record 26.6% of income in June, according to central bank data, as fast-growing fintechs offered easy credit at steep interest rates and a boom in online betting absorbed billions of reais of household income, pushing many families into financial distress.<\/span><\/p>\n The burden has been exacerbated by Brazil\u2019s 13.75% benchmark interest rate, one of the highest real rates in the world, which the central bank has gradually started to \u200blower while keeping a close eye on inflation.<\/span><\/p>\n \u201cIf you look \u200bat labor-market data, poverty indicators and the expansion of \u2060the middle class, you see a picture of significant progress in recent years,\u201d said Marcelo Neri, an economist at Fundacao Getulio Vargas. \u201cBut when you factor in cumulative food inflation, interest rates and online betting, the result is, let\u2019s say, a draw with a lot of goals scored on both sides.\u201d<\/span><\/p>\n Lula has tried to react.<\/span><\/p>\n With two weeks to go before \u200bthe first round, Lula rolled out measures that seemed aimed at boosting disposable income, including a 15% increase in a landmark welfare program, which will take effect before the \u200bsecond round of the elections \u2060in late October. He also announced an executive order banning online betting from October 6.<\/span><\/p>\n But polls suggest the measures have yet to make a meaningful impact on voter sentiment.<\/span><\/p>\n Back at the market, Carlos Alves da Silva has spent 15 years at the Barraca do Juca produce stand, its walls papered with posters showing the 1990s soap opera filmed there. He says it will not survive to 2028 if Lula wins.<\/span><\/p>\n \u201cIt\u2019s just a matter of taking on debt and scrambling to pay it off the following month,\u201d \u2060said Alves, who \u200bsupports Senator Bolsonaro.<\/span><\/p>\n Candidates have tried to show a path forward.<\/span><\/p>\n Senator Bolsonaro is campaigning on lower food costs through tax cuts, better transport links, expanded \u200bgrain storage and higher domestic fertilizer production. Lula points to growing farm output, government food stocks, and expanded rural credit.<\/span><\/p>\n But those proposals have yet to resonate with many Brazilians.<\/span><\/p>\nTHE \u2018VIBECESSION\u2019 HITS BRAZIL<\/span><\/h2>\n
SKEPTICAL VOTERS<\/span><\/h2>\n