Why was it possible for even those with low incomes to own a house and a car in the past, while today they can barely pay their bills? Understand how inflation, high interest rates, expensive credit, and rising property values have transformed the cost of living and compressed families' purchasing power over the past few decades.

Understand why purchasing power has fallen, how inflation, expensive credit, and more expensive housing have changed the financial lives of families.

In 2025, the discussion about the cost of living gained momentum in Brazil as the official inflation rate closed the year at 4.26%, according to data released by IBGE on January 9, 2026. At the center of this perception is purchasing power: as explained by the Central Bank, inflation is the widespread increase in prices and, when it rises, money buys fewer goods and services. In practice, this helps explain why the feeling that “before you could buy more with the same salary” is not just an impression. A direct example appears in the basic food basket of São Paulo: it cost R$ 382.13, according to a survey by DIEESE released in November 2015, and reached R$ 860.53 in February 2025, in a note published on March 10, 2025.

In ten years, the value more than doubled, highlighting how money has lost purchasing power over time, especially in the most basic items of everyday consumption.

In practice, this means that the perception that “before you could buy more with the same salary” is not just an impression. Data shows that over time, the real value of money decreases when prices rise faster than wages. A direct example helps visualize this: a basic food basket that cost around R$ 380 in 2015 rose to approximately R$ 860 ten years later, more than doubling in price.

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Accumulated inflation and loss of purchasing power over the years

Inflation does not need to be explosive to have a deep impact. Even at moderate levels, it slowly erodes purchasing power. In the last 20 years, for example, accumulated inflation in Brazil reached about 196%, which means that prices have practically tripled during this period.

This has a direct and measurable effect:

R$ 100 today buys much less than it did decades ago
The nominal salary may even rise, but the real salary (adjusted for inflation) often does not keep up

This phenomenon is known as the decline of real wages, that is, when income grows less than the cost of living. The practical result is simple and brutal: families end up working more or earning more nominally, but are able to consume less.

The weight of high interest rates and more expensive credit

Another decisive factor that differentiates the past from the present is the cost of credit. Decades ago, during certain periods, access to real estate and automotive financing was more favored by public policies and specific market conditions. Today, the scenario is more complex.

Brazil has historically dealt with high interest rates, and this directly impacts:

Real estate financing
Vehicle purchases
Everyday credit use

When interest rates rise, the final amount paid for an asset can increase drastically. A real estate financing, for example, can cost double or more than the original value of the property over the years, depending on the interest rate.

This creates a structural barrier: it is not just the price of the asset that has increased, but also the cost of purchasing it.

The impact of property appreciation on family budgets

If there is one factor that summarizes this change in reality, it is the real estate market. In recent decades, properties have undergone consistent appreciation in various regions of Brazil and the world, driven by factors such as:

Urban growth
Scarcity of land in central areas
Expansion of credit during certain periods
Real estate investment as a store of value

The effect of this is direct: the price of properties has grown faster than the average income of the population.

This means that:

Before: a larger proportion of people could buy property with lower income
Today: higher income, larger down payment, and more financing time are necessary

Moreover, the cost of rent also follows this appreciation, further pressuring the budget.

Cars have stopped being affordable and have become heavy financial commitments

The same phenomenon occurred in the automotive market. If before a car was considered a relatively accessible entry-level asset, today it has come to represent a much heavier financial commitment.

This occurs due to a combination of factors:

Increase in the price of new vehicles
Higher tax burden
Higher production costs (technology, safety, emissions)
High interest rates on financing

The result is that the car has ceased to be just a consumer good and has become, for many families, a long-term financial decision with a direct impact on the monthly budget.

Salaries did not keep up with the cost of living at the same speed

One of the most critical points of this change lies in the relationship between income and prices. According to classical economic concepts, purchasing power directly depends on the relationship between salary and inflation.

When salaries do not grow at the same speed as prices, there is a loss of purchasing power. And this has been observed in various recent periods:

Income grows slowly
Prices rise steadily
The cost of living increasingly pressures

This imbalance explains why many people feel that they work more but achieve less.

More complex cost of living and new expenses in the budget

Another important factor is that the consumption pattern has changed. Today, in addition to traditional expenses such as food and housing, there are new expenses that were not as relevant decades ago:

Internet and digital services
Streaming plans
Smartphones and technology
Education and constant specialization
Private health on a larger scale

This means that the modern budget is more pressured by new types of expenses. Even though some of these costs bring quality of life, they also reduce the available margin for acquiring larger goods, such as a house and a car.

Economic inequality and the invisible effect of inflation

There is still a little perceived phenomenon, but extremely relevant: inflation does not affect everyone in the same way. The economic theory known as Cantillon Effect explains that new money enters certain sectors of the economy first, benefiting some groups before others.

Meanwhile, most of the population feels the impact only later, already with higher prices. This contributes to:

Increased inequality
Difficulty in social mobility
Feeling of economic stagnation

In practice, those who depend solely on salary tend to lose more purchasing power over time.

Why the feeling of poverty is real and not just perception

The combination of all these factors creates a clear scenario:

High accumulated inflation
Wages growing less than prices
More expensive credit
More valued real estate
New expenses in the budget

This leads to an objective conclusion: the purchasing power of the average income has decreased compared to the past. And this is not just a psychological perception. It is a documented economic phenomenon, measured by indicators such as:

IPCA
Real wage
Cost of the basic basket
Purchasing power indices

Understand why purchasing power has fallen, how inflation, expensive credit, and more expensive real estate have changed families' financial lives. — Understand why purchasing power has fallen, how inflation, expensive credit, and more expensive real estate have changed families’ financial lives.

When these indicators are analyzed together, it becomes evident that money has lost strength over the decades.

What do you think weighs the most on your budget today and why?

The economic transformation of recent decades has profoundly changed the relationship between income, consumption, and quality of life. But this reality is not the same for everyone.

For some people, the biggest impact is on housing.
For others, it’s on credit, food, or basic services.

In light of this scenario, it’s worth reflecting: what weighs most on your budget today and what has been the biggest change you’ve noticed in your financial life over the years?

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Understand why purchasing power has fallen, how inflation, expensive credit, and more expensive housing have changed the financial lives of families.

Accumulated inflation and loss of purchasing power over the years

The weight of high interest rates and more expensive credit

The impact of property appreciation on family budgets

Cars have stopped being affordable and have become heavy financial commitments

Salaries did not keep up with the cost of living at the same speed

More complex cost of living and new expenses in the budget

Economic inequality and the invisible effect of inflation

Why the feeling of poverty is real and not just perception

What do you think weighs the most on your budget today and why?

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Understand why purchasing power has fallen, how inflation, expensive credit, and more expensive housing have changed the financial lives of families.

Accumulated inflation and loss of purchasing power over the years

The weight of high interest rates and more expensive credit

The impact of property appreciation on family budgets

Cars have stopped being affordable and have become heavy financial commitments

Salaries did not keep up with the cost of living at the same speed

More complex cost of living and new expenses in the budget

Economic inequality and the invisible effect of inflation

Why the feeling of poverty is real and not just perception

What do you think weighs the most on your budget today and why?

The oldest tree in the world, alive since before the birth of Jesus Christ, is cut down in a scientific study and the case changes environmental preservation rules.

Seen from space, an image taken by an astronaut shows an unlikely oasis in the Saudi Arabian desert, protected by a terrain that slows the advance of sand, surrounded by green circles, remnants of an extinct lake and nearly 10,000 years of preserved history.

An entire island in the Pacific wants to surround itself with a colossal barrier against the ocean to try to escape increasingly violent waves and not be swallowed by the sea in the coming decades.

After ten days orbiting the Moon, science confirms that the astronauts of the Artemis II mission return with altered bodies.

With 7.4 trillion tons of artificial snow pumped in 10 years, an extreme operation could stabilize the West Antarctic ice sheet and prevent a sea level rise of more than 3 meters, but it would require snow cannons, ocean water, and energy on an almost industrial scale at the end of the world.

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