Debt and delinquency rates on the rise among Brazil’s middle class

According to a survey by the National Confederation of Trade of Goods, Services, and Tourism (CNC), middle-class families in Brazil witnessed a rise in debt and delinquency in May.

The survey revealed that 79.6% of families earning between 3 and 5 minimum wages reported having debts, a rise from 78.7% in April.

Delinquency rates also increased, with 27.7% reporting overdue debts, a 0.4 percentage point increase from the previous month’s figure of 27.3%.

This data is derived from the Consumer Indebtedness and Delinquency Research (Peic), published by the CNC on Tuesday (June 6).

The survey included various forms of debt, such as post-dated checks, credit card balances, overdrafts, store credit cards, payroll loans, personal loans, and vehicle and housing payments.

Overall, in May, 78.3% of Brazilian families were in debt (whether overdue or not), maintaining the same percentage recorded since February.

Of these families, 18% described themselves as “heavily indebted,” the highest rate since August 2022.

The research also highlighted that low-income families (earning up to 3 minimum wages) saw a slight decrease in indebtedness, from 79% to 78.7%.

However, the proportion of these families with overdue debts remained stable at 36.3%.

As for the inability to pay debts, the income bracket between 5 and 10 minimum wages saw the most significant change, from 7.9% to 8.5%.

CNC president José Roberto Tadros attributed the rise in interest rates as a significant influence on the middle class, while increased social benefit policies affected the lower income brackets.

“This largely explains the results of the May Peic,” he concluded.

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