Over the last ten years, the Brazilian economy has suffered two major shocks: one internal, between 2014 and 2016, and the other external, with the onset of the pandemic in 2020. These shocks have affected consumer confidence and income, two crucial variables for the credit market. After these shocks, what assessment can we make of the state of the Brazilian consumer?

Falling unemployment, rising incomes

Data recently released by the IBGE shows that the country's unemployment rate fell to 5.8% in the 2nd quarter of 2025, reaching the lowest level in the historical series that began in 2012. After reaching a peak of 14.9% in March 2021, the country's unemployment rate began to fall. Reflecting the demand for work, average real income is growing. In the 2nd quarter of 2025, the IBGE estimated average income at R$ 3,477, with growth of 3.3% compared to the same period in 2024, already discounting inflation. Employment and income are two important predictors of consumption and, consequently, the use of credit. But this relationship is mediated by other variables, such as confidence and indebtedness.

Confidence still shaken

Even with the rise in income, the Consumer Confidence Indicator, calculated by the Getúlio Vargas Foundation (FGV) shows that most consumers' perception of the economy is still mostly negative. This indicator ranges from zero to 200 points. According to the methodology, values above 100 points indicate the prevalence of optimism; values below this level indicate the prevalence of pessimism. An analysis of the historical series shows that, over the last few years, the indicator has remained below 100 points. In the June 2025 measurement, consumer confidence reached 85.9 points. The current level is considerably higher than that recorded during the pandemic, but it is still far from optimistic. Confidence is one of the determinants of the search for credit.

Persistent inflation driven by food items

IBGE data shows that the official inflation index (IPCA) accumulated a rise of 5.2% in the 12 months ending in July 2025. Since the second half of 2023, inflation has hovered around 5.0%, at a level that exceeds the ceiling of the target set by the National Monetary Council (CMN). A breakdown of the data by item of goods and services reveals that, in recent months, the “Food and beverages” group has led the country in price rises. The persistence of inflation, especially as it affects such basic items, is one of the factors that help explain the low level of confidence.

Bad debt on the rise

The Central Bank measures the commitment of household income to debts incurred through the National Financial System. The most recent data shows an increase in the commitment of income in the country. In May 2025, household indebtedness reached 49.0%, compared to 47.6% in May 2024. Indebtedness and default are different concepts, but both are advancing in the country. According to data from the credit bureau sector, the percentage of people in debt in the country reached 47.8% in June 2025, compared to 44.9% in the same month of the previous year.

The evolution of credit depends on the various structural changes that have been taking place in this market and on the country's economic situation. After the recession of the last decade, credit began to grow again in the country and is still growing at high rates, especially in the individual segment. Even during the pandemic, credit growth remained significant. Faced with this growth, the challenge is to maintain sustainability while avoiding the advance of defaults. Credit is growing as income rises, linked to consumer confidence. In the coming years, credit discipline will be fundamental for the economy to advance and bring social welfare to the country.

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