Brazilian consumer confidence has reached its lowest level in over two years, reflecting growing economic pessimism.
The Getulio Vargas Foundation (FGV) reported a 2.6-point drop in the Consumer Confidence Index (ICC) for February 2025, bringing it to 83.6 points.This marks the third consecutive decline and the weakest reading since August 2022, signaling widespread concern about inflation and economic uncertainty.
The ICCs two components reveal the depth of this sentiment.The Current Situation Index (ISA) remained stable at 79.4 points, but the Expectations Index (IE) fell sharply by 4.3 points to 87.3, highlighting anxiety about future conditions.The downturn affected all income groups, with the steepest decline of 3.3 points among households earning up to R$2,100 per month.
Middle-income households saw a drop of 2.4 points, while higher-income groups experienced smaller decreases.Inflation has been a significant driver of this pessimism, particularly for low-income families struggling with rising food prices.
In January, food and beverage prices rose by 1.06%, with notable spikes in essentials like tomatoes (+17.12%) and ground coffee (+7.07%).Consumer Confidence in Brazil Drops to Lowest Level Since 2022.
(Photo Internet reproduction)Economic Challenges in BrazilThese increases have strained household budgets, especially for those with limited financial flexibility.
High interest rates have further dampened consumer sentiment by making debt more expensive and discouraging purchases of durable goods.Brazils central bank has maintained restrictive monetary policies, keeping borrowing costs high to combat inflation.
Despite these challenges, a strong labor market has provided some relief.Low unemployment levels and steady job creation have supported household incomes, preventing an even sharper decline in confidence.
FGV economist Anna Carolina Gouveia cautioned that the ICC could remain at low levels in the coming months.She noted that it may stay far below the optimism threshold of 100 points.
Persistent inflation and high interest rates will likely continue weighing on consumer behavior, posing challenges for policymakers and businesses alike.