Brazil Markets Closed After Protests Over Price Hikes

RIO DE JANEIRO — Noisy protests by housewives against price increases forced federal agents to close supermarkets here and in other major cities Saturday as Brazil began an official war against inflation.

After announcing a drastic monetary reform Friday, creating a new unit of Brazilian currency, President Jose Sarney froze prices for a year and called on Brazil’s 135 million people to act as federal inspectors to prevent price increases.

Sarney, in a nationally television broadcast, deputized housewives to act as price vigilantes. The response was immediate, with women wheeling shopping carts and singing the national anthem in supermarkets as police arrested store managers for unauthorized price increases.

Some Looting Reported

Angry customers looted supermarkets in various parts of Rio after some shopkeepers marked up prices, the Associated Press quoted a state police spokesman as saying. In Sao Paulo, police stopped large groups of protesters from ransacking three supermarkets that were marking up prices, AP reported.

Inflation has been the scourge of Brazil’s wage earners and consumers, with price increases reaching an annual level of 250% this year. Like militants in a cultural revolution, the anti-inflation demonstrators were nicknamed “Price Red Guards” by the press.

Sarney said Friday that Brazil’s economic growth and social peace depend on a “life or death fight” to stabilize prices and protect worker income. The president said merchants violating price controls would be jailed.

This drastic shift toward a “zero-inflation” policy came after consumer prices rose an average of 15% a month in January and February, pointing toward runaway inflation this year.

Newspapers published price ceilings Saturday on 74 basic consumer products, but many supermarkets had begun raising price tags by as much as 100% early Friday as the news of the impending price controls leaked out.

The public reaction Saturday morning, when many Brazilian do their weekly shopping, was noisy demonstrations by customers in shopping centers, where prices were frantically raised by merchants in an attempt to beat the freeze.

Finance Minister Dilson Funaro said price violators would be forced to restore prices to the levels displayed when federal agents monitored prices during the first two weeks of February.

The housewives’ demonstrations brought police squads running to protect supermarkets here, in Sao Paulo and in other major cities. The police were followed by federal price inspectors, who closed some stores and arrested managers who had violated the price freeze.

If the price line is not maintained, the Sarney government will not be able to persuade unions to support the present anti-inflationary policy.

Pay Raise Only 50%

The head of the bank workers’ union said his members were planning a strike over the government’s economic moves. The workers were due a 105% pay raise but, under the monetary reform, will now receive only 50%, he said.

The monetary reform created a new currency, the cruzado, which has the value of 1,000 cruzeiros, the depreciated former Brazilian currency. The cruzado will have an initial value, when banks and financial markets reopen Monday, of 13.8 to the dollar.

The attempt by Brazil, which has the Third World’s largest foreign debt, to reduce inflation drastically and maintain a strong, stable currency is a break with 20 years of monetary policy based on accommodating to inflation by indexing prices to the rate of currency devaluation.

“Now, we either break inflation or bust,” said Funaro to the team of economic experts who developed the new zero-inflation policy.

O Estado de Sao Paulo, one of Brazil’s leading newspapers, said in an editorial that Sarney’s decision offers “the last chance for inflation crisis to be defeated by democratic means.”