Analysis: Brazil’s stiff prices will stun World Cup fans

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br Wcup Busting Budgets~1

Associated Press

Tourists on a Rio de Janeiro street decorated for the upcoming World Cup in Brazil. Visitors to the country will find prices astronomical, from hotels, to food and drinks, to soccer merchandise. Photo: AP

Rio de Janeiro - World Cup visitors, welcome to Brazil, land of soccer, sun and sky-high prices.

Unlike nearby Latin American nations where a tourist’s dollar or euro seemingly stretches forever, Brazil is astoundingly expensive.

If one’s budget is not immediately busted by the flight or the hotel, it soon will be by the $10 (R108) caipirinha cocktail, the $17 cheeseburger or the $35 pepperoni pizza. And those are the prices city-dwelling Brazilians saw even before the World Cup set off a new standard of sticker shock.

The dizzying prices are referred to in the country as the “custo Brasil,” or “Brazil cost” – the mixture of high taxes and steep import tariffs, combined with bad infrastructure, a dose of inefficiency and a thick shot of bureaucracy.

Demand leading up to a big event like the World Cup naturally raises prices. But since costs were already high, tourists should prepare to dig deep into their wallets and not be too miffed to receive goods or services of inferior quality, said Rafael Alcadipani, a business administration professor at the Getulio Vargas Foundation, Brazil’s top think tank. “Anything you buy in Brazil will be more expensive than in the US or Europe, but the quality is going to be worse.”

Hotel rates in many of the host cities more than doubled ahead of the event. TripAdvisor reports visitors to Rio de Janeiro will face the highest prices, with hotel rates averaging $445 a night. Add in food and other expenses, and travellers should prepare to spend $682 a day.

Next costliest are Fortaleza ($602 a day) and Manaus ($554). Even the more affordable host cities will set travellers back a fair amount: $457 a day in Cuiabá and $477 in São Paulo.

“The Cup prices are ridiculous. Everything shot up. The only thing you can buy in Brazil is a bikini, a cachaça [Brazilian sugar cane liquor] and a pair of Havaianas [slip slops],” said Gillian Santos, a Brazilian who lives in Belgium and was back in Rio on a visit.

Experts say prices stay high because supply cannot keep up with demand. About 40 million Brazilians – a fifth of the population – joined the middle class in the past decade, on the back of strong economic growth and increased government social programmes. Between 2009 and 2012, average annual income rose by more than 40 percent, from $8 140 to $11 630, according to the World Bank.

For many, the new affluence sparked a spending spree.

Brazil tries to protect its local industries by charging high tariffs on virtually all imported goods. Travellers who lose or forget an item might decide to do without rather than pay local prices. The iPhone 5S that costs $199 in the US has a starting price of $1 250 on Apple’s Brazilian website. A pair of the popular Nike Flyknit Lunar2 shoes, costs about $313 in Rio – nearly triple the US price.

“Everything is expensive,” said Nadir Fraguas, a retired bank employee at a Rio mall pondering whether to spend more than $100 on a Brazil team jersey for her grandson. “Prices were already high, now they’re impossible.” – Sapa-AP


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