Economics
Water Crisis Is Compounding an Inflation Time Bomb in Brazil
- Electricity prices jumping as costlier thermo plants deployed
- Bolsonaro wants to avoid power rationing ahead of elections
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Brazil’s worst water crisis in nearly a century is fueling inflation that’s reverberating through the economy, posing an additional challenge for the central bank and for President Jair Bolsonaro’s re-election bid.
Electricity bills will increase as much as 15% next month as dangerously low water levels in hydroelectric reservoirs force the government to turn to more expensive power plants fueled by natural gas, diesel or coal, according to calculations from Fundacao Getulio Vargas, a Brazilian think tank. Food prices are also going up as farmers lose part of their crops to the drought.