Number of indebted families in São Paulo sets record – FecomercioSP

RIO DE JANEIRO, BRAZIL – The percentage of indebted families in the city of São Paulo reached 62.7% in May, with consistent growth over the past six months, according to the Consumer Indebtedness and Delinquency Survey, developed by the Federation of Commerce of Goods, Services, and Tourism of the State of São Paulo (FecomercioSP).

The index registered its last drop in November 2020, when it totaled 56.1%, and has since then been growing by an average of 1.1 percentage points per month, nearing the record high of 63.8%, reached in March last year.

According to the survey, in absolute figures, 270,000 households have incurred new debts since November 2020, increasing the total to 2.49 million families in São Paulo. Of these, the majority (78.3%) have outstanding credit card bills, while the second largest cause of indebtedness are installment payment plans (14.4%).

According to the federation, the negative results show that a recovery has not yet occurred, but rather a more intense deterioration in the economic conditions of São Paulo families, attributed to the second wave of coronavirus infections.

“Therefore, the solution many of them find is to maintain consumption – even of basic items – through other means of payment, such as credit cards,” the entity states.

The study also found that 19.2% of families are in arrears, the highest rate since April 2020, when 21.6% was recorded. In addition, some 8.6% of households report being unable to pay their bills, the highest level this year.

Consumption in decline

The federation also pointed out, through the Household Consumption Intentions, that consumers in the city of São Paulo are insecure. The index fell 3.8% this month, after dropping 4.2% in April, reaching 67.3 points. The study attributed the downward shift to the decrease in income and the rise in unemployment.

According to the entity, virtually all the variables that make up the indicator were negative. The employment prospects of respondents, for instance, fell 11.3% after dropping 7.2% last month. The current purchase of durable goods shrank by 9.5% after having dropped 6.5% in April.

On the other hand, the Consumer Confidence Index rose 0.9% in May, reaching 105.9 points. Compared to the same period in 2020, there is growth of 9.4%. The figure had regular variables, with the Current Economic Conditions Index standing at 62.9 points, down 2.1% from April. The Consumer Expectations Index, on the other hand, improved after the last contraction (-6.7%), growing 1.9%, reaching 134.5 points.

“For FecomercioSP, the ideal scenario would be the recovery of employment in the city, enabling families not only to feel safe to consume again, but also to take on debt without it turning into default,” stated the entity.

Source: Exame