Consumption growth in the BRICs is peaking

Overview

Consumption growth has been very strong in the BRICs, particularly in China and Brazil. We reported in July that consumption had led the BRICs' recovery from the crisis and we predicted that growth would slow as fiscal stimulus wore off. This has indeed happened, but now the process is exacerbated by another problem – inflation.

Inflation is slowing the growth in real incomes despite rapid increases in nominal wages. In countries where food makes up a large part of the consumption...