Cost-of-Living Anger Tests Lula's Bid for a Fourth Term in Brazil

Brazil's President Luiz Inacio Lula da Silva is asking voters for a fourth term, but frustration over the cost of living is testing his appeal in next month's election.

For many households, years of rising food prices have left budgets stretched even as headline inflation has eased in recent months. Kleyton Zacarioto, a 39-year-old butcher near Sao Paulo's historic centre, said customer traffic has been slowing for years. He acknowledged that Lula "did good things" during his earlier time in office in the 2000s, but said the president is the one candidate he will not vote for. "Someone who earns a minimum wage has no way to get ahead," he said.

Lula, 80, has urged patience, pointing to record low unemployment, falling inequality and recent months of easing inflation as evidence that the economy is stronger than it feels. "I know it's still not great, but I guarantee inflation will stay under control," he said in a recent campaign spot, adding that he understood what it was like to struggle to make ends meet.

Polls have for months shown a neck-and-neck race between 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. Surveys suggest the economy is a central reason Lula has struggled to pull ahead. A Quaest poll published in September found that nearly half of Brazilians believe the economy has worsened over the past year, compared with just 19% who said it had improved.

Senator Bolsonaro has made the squeeze on paychecks a centrepiece of his campaign, frequently contrasting current supermarket prices with those during his father's presidency. Lula's campaign has pushed back with a website dubbed "Market of Lies" and filed a complaint with the Superior Electoral Court accusing the senator's campaign of misrepresenting prices.

Analysts say the debate reflects a gap between improving labour and inflation data and what many households experience day to day. "All the big figures say that this has been a good government," said political analyst and author Thomas Traumann. "The fact is that everyday folks just don't agree with that." He compared the dynamic to US President Joe Biden's struggles in 2024 to bridge a disconnect between positive macroeconomic data and negative consumer sentiment, a moment economics commentator Kyla Scanlon dubbed the "vibecession."

Felipe Nunes, founder and CEO of the pollster Quaest, said voters judge the economy by their ability to pay bills, consume goods and services, and meet personal goals. Food prices and rising debt burdens help explain why many families have seen little improvement in their post-pandemic spending power. While food inflation has slowed sharply and prices even fell between June and August, they remain well above pre-pandemic levels.

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. The burden has been exacerbated by Brazil's 13.75% benchmark interest rate, one of the highest real rates in the world, which the central bank has gradually started to lower while keeping a close eye on inflation.

Marcelo Neri, an economist at Fundacao Getulio Vargas, said labour-market data, poverty indicators and the expansion of the middle class point to significant progress in recent years. But once cumulative food inflation, interest rates and online betting are factored in, he said, the result is "a draw with a lot of goals scored on both sides."

With two weeks to go before the first round, Lula rolled out measures aimed at boosting disposable income, including a 15% increase in a landmark welfare programme that will take effect before the second round in late October, and an executive order banning online betting from October 6. Polls suggest the measures have yet to shift voter sentiment meaningfully.

At the market, Carlos Alves da Silva, who has spent 15 years at the Barraca do Juca produce stand, said it will not survive to 2028 if Lula wins. "It's just a matter of taking on debt and scrambling to pay it off the following month," said Alves, who supports Senator Bolsonaro.

Senator Bolsonaro is campaigning on lower food costs through tax cuts, better transport links, expanded grain storage and higher domestic fertiliser production. Lula points to growing farm output, government food stocks and expanded rural credit. Neither message has resonated with many Brazilians. Conceicao Melquiades, visiting the market from Manaus, said she is struggling with rising electricity and grocery prices and has seen no "real proposals" from the candidates. "In the end not much is going to change," she said.