The percentage of indebted and delinquent families in Brazil is the highest in 12 years.
Household debt levels in February were the highest since records began: 76,6%. Default rates are also at a record high: 27%.
247 - The situation for Brazilian families is desperate: both the percentage of indebted families and the percentage of those in default have been hitting record highs since last year and are at their highest level in 12 years. The trend is for default rates to rise even further in 2022 due to increased interest rates and the end of emergency measures created during the pandemic to help those in debt, according to economists interviewed by [source name]. BBC Brazil.
The war in Ukraine is expected to worsen this scenario by causing increased inflation, which reduces the family income available to meet financial obligations. At the end of February, the Minister of Economy, Paulo Guedes, reported that the government is studying releasing funds from the Severance Indemnity Fund (FGTS) to help indebted families, but did not give a date.
The average debt level of Brazilian families throughout 2021 reached 70,9%, the highest level ever, according to the Consumer Debt and Default Survey (Peic) conducted by the National Confederation of Commerce of Goods, Services, and Tourism (CNC). The level was 76,3% in December, a historic record. In February of this year, the record was broken again: 76,6%.
"Indebtedness accelerated throughout last year," said Izis Ferreira, an economist at CNC, who added: "We have never had a year in the historical series, which begins in 2010, in which indebtedness grew so rapidly."
She highlighted to the BBC that, in the 10% rise in inflation in 2021, items that have a strong impact on family income weighed heavily, such as gasoline (with a price increase of 47%), electricity (21%), food (8%) and medicines (6%).
Meanwhile, Brazilian household income fell 10,7% in the fourth quarter of 2021 compared to the same period last year, the lowest level in the historical series, which began in 2012: "This meant that these families needed to use credit cards, overdrafts, and store installment plans more to maintain their level of consumption."
The economist from CNC observes that, throughout 2021, despite the increase in indebtedness, delinquency remained low for most of the year, with an annual average of 25,2%. However, the rate began to rise from October onwards. In that month, 25,6% of families had overdue bills. This was 27% in February of this year, the highest level in the CNC's historical series, which began in 2010.
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