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Life in Brazil costs an arm and a leg

February 7, 2010

A worker that earns the average Brazilian salary would need to work 40 minutes in São Paulo and 51 minutes in Rio to buy a Big Mac. In contrast, an average New Yorker would have to work mere 14 minutes to buy McDonald’s bestselling sandwich. The so-called Big Mac Index is only one of the instruments used by the Swiss bank UBS to illustrate the fluctuations of the purchasing power in several parts of the world.
São Paulo and Rio are, indeed, pricey cities. The disproportion is the same for other products. To buy 1 kilo of rice, for instance, you have to work 12 minutes in São Paulo, 15 in Rio and 8 in New York.
Still according to UBS – that systematically compares the cost of life in 73 cities – São Paulo got the 45th position and Rio the 48th in the last survey. This means they are more expensive than Prague, Bangkok, Beijing or Moscow. Naturally, there are fluctuations depending on the product or service you look at. Even if renting an apartment is expensive in Brazilian metropolis it cannot be compared to the exorbitant NY rentals. This explains why New York appears in the UBS study as the 6th most expensive metropolis.

Thomas Berner, an American economist that works for UBS on this study, says prices have been growing consistently in Rio and São Paulo in the last 10 years. The price of the products and service that the bank uses as a reference became aproximately135% more expensive in reais, the national currency, between 2000 and 2009. Berner was interviewed by G1, a website related to Globo, the main Brazilian news network. G1 chose the Honda Civic to illustrate this. The car costs around 15,000 dollars in the United States and 65,000 reais (35,000 dollars) in Brazil.

Once the average income didn’t grow proportionally, you have to work many more hours to keep buying the same. Consequence: the average paulistano may consume less than half what a New Yorker can purchase.

What is your experience? Do you find you find your purchasing power lower in Brazil?

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4 comments

  1. I realized all of this when I was visiting this other site about products to buy online in the US and bring them here. You know the iPad? It would cost around R$1100.00 reais (taxes included) to have one. I bet when it arrives here in Brazil, the iPad will cost no less than R$3000.00 I presume.


  2. Rio is very expensive!!! I was in shock to find out that a metro ride in Rio is more money than in Paris.
    It is crazy but for now Rio is worth every penny.


  3. Cachaça is the best deal by far. A bottle of 51 might cost R$5–a little less than $3. The cheapest liter of vodka in the USA would cost some $9, three times as much.

    Fine lumber is cheaper in Brazil, as are limes and bananas. Chuchu is free, kind of like pecans in Texas.

    Bricks and ceramic tiles of all sorts are much cheaper in Brazil, as is the labor of the bricklayer or stonemason.


  4. For some things but not for others. Having recently moved from New York City to Sao Paulo, Brazil, I also have an insiders perspective on a change in cost of living between these two cities. My suggestion is that before you use a high-level report to decide on a move or a real-estate purchase, make sure you dig into the detail of what the things that make up your spending really cost. For example, dining out in New York City and Sao Paulo are, surprisingly, similar in cost. However, you can get about three times more apartment in Sao Paulo for what you would pay in New York. In Sao Paulo, anything made outside the city is two to three times more expensive because of duties. In Sao Paulo, you can also have someone work at your home five days a week, all day, and cook, for little more than it costs for you to have someone come and clean your much smaller New York apartment (no cooking) once a week. If relocating is a decision you need to make, check cost by categories of your spending and budget. More of my account of transitioning from New York to Sao Paulo at http://www.bornagainbrazilian.com.



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