The 2022 minimum wage will have a historic adjustment and the highest increase in recent years

With the end of the year approaching, one of the topics Brazilians are most eager to learn about is the readjustment of their salaries for the next year. However, in 2022, workers may not only have readjustment, but they will also have the largest readjustment in at least the past six years.

What appears at first glance as an interesting thing is considered by many economists to be a complex and even bad thing, considering that the correction of the minimum wage occurs based on developments in inflation in the previous year, i.e. readjustment of the national minimum in 2022 will be high, as inflation reached The country has very high rates.

Adjusting the minimum wage and inflation

The minimum wage is readjusted based on the progress of inflation in the country, i.e., the higher the rate of inflation in a given year, the greater the minimum wage adjustment in the following year.

To measure inflation levels as well as to adjust minimum wage, INPC (National Consumer Price Index) is used. This indicator, according to the Economic Policy Secretariat of the Ministry of Economy released on November 17, reached a high of 10.04%.

It should be noted that this is a government estimate based on progress in inflation in the current scenario, however, the final increase in INPC will be known at the end of the year, when it is possible to calculate the cumulative inflation levels in the last 365 days.

Thus, with the new forecast as INPC of 10.04%, the national minimum wage in 2022 should also undergo at least a readjustment, given that the current legislation on minimum wage readjustment occurs based on progress in inflation.

Thus, the new rise raises the minimum wage to R$1,210.44, an adjustment considered the highest in the past six years, when the minimum wage in 2016 saw an 11.6% increase from R$788 in 2015 compared to R$880.

Reasons for high inflation

According to a number of experts, the rise in fuel prices and the increase in electricity and food are among the pillars of the increase in inflation.

It is also necessary to highlight the strength of the dollar, which directly reflects these increases. That’s because the coin gained 29.33% in 2020 and so far has accumulated an increase of about 7%, sometimes even selling above 5.60 BRL.

The biggest problem with all this inflation is the effect it has on the poor, after all, the increase in inflation does not occur on demand, i.e. it is driven by families wanting to increase consumption, since the economy is weak.