With an ailing economy, Brazil saw a record number of indebted citizens in 2021, according to research.
According to the CNC (National Confederation of Commerce), indebtedness has reached more than 70% of Brazilian families, the highest rate in 11 years.
Ana Cristina Campos, Agência Brasil - The average debt level of Brazilian families in 2021 was the highest in 11 years, according to the Consumer Debt and Default Survey (Peic), released today (18) by the National Confederation of Commerce of Goods, Services and Tourism (CNC).
According to the survey, last year saw a record number of Brazilian families in debt, with an average of 70,9%, while December reached an all-time high, with 76,3% of all families in debt. According to the CNC, families resorted more to credit to sustain consumption.
When assessed by income bracket, the average debt of families earning up to 10 minimum wages per month increased by 4,3 percentage points (pp), reaching 72,1% of the total. In the upper income bracket, above 10 minimum wages, the indicator increased even further, by 5,8 pp, reaching 66%.
The president of the CNC, José Roberto Tadros, assesses that, among families with incomes above 10 minimum wages, pent-up demand, especially for the consumption of services, caused debt to increase even more significantly, especially on credit cards.
"The population's immunization process made it possible to ease the pandemic, resulting in increased foot traffic in commercial areas throughout the year, which led to a resurgence in consumption, particularly in services," Tadros said in a statement.
Compared to 2020, of the country's five regions, only the Central-West showed a 0,3 percentage point drop in the index. The North remained stable, and the Southeast stood out with a 5,9 percentage point (pp) increase, followed by the South (+5,5 pp) and the Northeast (+4,5 pp). However, considering the total debt, the South had the highest percentage, approaching 82%.
default
In contrast to debt indicators, delinquency rates fell last year. According to the survey, the average percentage of families with overdue bills and/or debts decreased by 0,3 percentage points compared to 2020, reaching 25,2%.
After starting 2021 at a higher level than that observed at the end of the previous year, the monthly default percentage decreased until May, but has been showing an upward trend since then, reaching 26,2% in December and remaining above the annual average.
"The percentage of families who reported being unable to pay their bills and/or overdue debts and therefore expected to remain in default also decreased by 0,6 percentage points compared to 2020, totaling 10,5% of households in the country. The figures indicate that this segment of consumers showed varying trends throughout the year. While, in the first half of the year, the recurring default indicator fluctuated between low and high, from July onwards it began to show a downward trend, ending the year at 10% of all families, below the annual average," stated the CNC.
For Izis Ferreira, the CNC economist responsible for the research, the figures indicate that, despite tighter financial conditions, consumers were able to meet their financial obligations and avoid increasing defaults until the end of the third quarter. In the last three months of the year, however, the overdue accounts indicator increased, already indicating an upward trend for early 2022.
"Consumers will continue to face the same financial challenges as in the second half of 2021, mainly inflation, high interest rates, and a still-fragile formal job market. Added to this is the upcoming payment of typical first-quarter expenses, which is expected to further tighten household budgets during this period," said Izis.
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