Share of indebted Brazilians is 75.6% in November, up 1% from October – CNC

RIO DE JANEIRO, BRAZIL – The share of Brazilians with debts falling due reached 75.6% in November, up 1.0 percentage points (p.p.) from October and 9.6 p.p. from November last year, according to data from the Survey of Consumer Indebtedness and Default (PEIC), released on Monday, November 29 by the National Confederation of Trade of Goods, Services and Tourism (CNC).

Among the indebted, 26.1% reported having overdue debts, including consumer bills such as electricity and water, among others, a number 0.5 p.p. higher than in October and 0.4 p.p. more than in November. The share that declared being unable to pay their debts or overdue bills and, therefore, “will continue in default” remained stable, 10.1%, a drop of 1.4 p.p. compared to the same month in 2020, CNC reported.

In a note, CNC noted that, “despite higher interest rates,” credit concessions with free resources for individuals continue to grow – according to Central Bank data, October registered a real growth of 3.3%.

For the entity, the interest rate hike implemented by the Central Bank since March, “in an attempt to better anchor future inflationary expectations,” was “not enough to slow down the dynamics of indebtedness.” “Credit continues to be the solution for Brazilians to recompose their income,” the note says.

Credit use is more relevant among households with an income of up to 10 minimum wages. From October through November, the share of indebtedness in this income bracket jumped from 75.9% to 77.0%, compared to 67.9% in November 2020. “For this group in particular, current inflation for consumers close to 11% per year tightens household budgets and increases the need for credit to organize expenses,” CNC notes.

Among households with an income above 10 minimum wages, indebtedness stood at 70.3% in November, up from 69.5% in October and 59.3% in November 2020. “Households in the highest income bracket have been redirecting their savings, amplified during the pandemic, to the consumption of services, thereby contributing to the recent upturn in economic activity in the sector,” CNC says.

The default indicator presents a divergent behavior according to the income bracket. The share of households with bills or debts in arrears in the lowest income bracket increased from 28.9% in October to 29.4% in November, up from 28.9% in November last year. In the higher income bracket, the share of defaulters dropped from 11.6% to 11.4% from October through November, down from 11.8% in November 2020.

“Among the indebted, the share of households with debts due for over a year has been increasing since the end of the first quarter and reached a record high of 36.2%, indicating that consumers are seeking to extend the payment terms of their debts so that the installment may adjust to their budgets and thus reduce the commitment of their income,” reads the CNC note.