Economy

Survey: 78.5% of Brazilian families are in debt

This is the highest in this time series, which started in January 2010

Cristina Indio do Brasil

Published on 11/07/2023 - 15:31

Rio de Janeiro

Dinheiro — © Marcello Casal JrAgência Brasil

The percentage of Brazilian households with debts due increased 0.2 percentage points in June, reaching 78.5 percent of families countrywide. Those describing themselves as “very indebted” added up to 18.5 percent.

The data can be found in a monthly survey by the National Confederation of Trade in Goods, Services, and Tourism (CNC) and were released Tuesday (Jul. 11).

The increase breaks a four-month streak of stability in the indicator.

Income

The study shows that, despite June’s higher indebtedness—a month before CNC’s prediction—the average slice of income committed to debts was 29.6 percent, the lowest since September 2020.

Economist Izis Ferreira, who was responsible for the survey, said “this comes as a result of an improvement in income among consumers making up to ten minimum wages, which occurs in turn due to the favorable dynamics of inflation, which has been decelerating since the end of last year.”

Default

Default followed the movement of indebtedness in June. Households with debts overdue totaled 29.2 percent—up 0.1 percentage points. Of consumers in arrears, 4 out of 10 started off June unable to honor commitments from previous months, the highest since August 2021.

Ferreira pointed out, however, that a more favorable labor market and the relief in inflation, which led to more income available, were not enough to rid those with longer overdue debts of default.

“The proportion of consumers with overdue debts is back on the rise after six months of decline, along with the contingent of people declaring they will not be able to pay off overdue debts from previous months,” said the economist. High interest rates continue to make it difficult for them to improve this situation, she added.

In the view of CNC Chair José Roberto Tadros, the current landscape of indebtedness and default is taking its toll on households’ ability to consume. “The balance between price stability and economic growth is a challenge to be pursued and is key to resume development,” the text published by CNC reads.