Brazilians were both more indebted and more in arrears between February and March, according to the National Confederation of Trade in Goods, Services and Tourism (CNC).

The proportion of families with overdue bills rose from 77.9 per cent in February to 78.1 per cent in March, according to the Consumer Indebtedness and Default Survey (Peic). However, the result is still lower than a year earlier, in March 2023, when 78.3 per cent of households were in debt.

“This result shows an increased demand for credit by families, taking advantage of lower interest costs,” the CNC said in its release of the study.

For the purposes of the survey, debt is defined as accounts payable in the form of credit cards, overdrafts, store bills, payroll loans, personal loans, post-dated cheques and car and house payments.

Delinquency

After five consecutive months of decline, the proportion of consumers with overdue bills rose from 28.1 per cent in February to 28.6 per cent in March. In March, the proportion of households in arrears was higher at 29.4 per cent.

“This increase in arrears is also reflected in the increase in the proportion of families who will not be able to pay their debts, which is the most complex group of defaulters, but with a difference of only 0.1 percentage points and in this case already exceeds the indicator for the same month last year,” the CNC said.

The proportion of families who said they were unable to pay their debts and therefore remained in arrears rose from 11.9 per cent in February to 12.0 per cent in March. The result is still higher than in March 2023, when 11.5 per cent were in this situation.

“In order to increase their disposable income, families have been trying to extend the deadline for paying off their debts. So much so that the time spent in debt reached 7.1 months in March 2023, the highest level since April 2022,” said CNC economist Izis Ferreira in a statement.

Poorer people drive up debt and defaults

From February to March, the increase in debt and defaults was driven by lower income families. In the group with a monthly family income of up to three minimum wages, the proportion of people in debt rose from 79.2 per cent in February to 79.7 per cent in March.

In the lower middle class, with incomes between three and five minimum wages, the proportion of people in debt fell from 79.5 per cent in February to 79.3 per cent in March. In the group earning between five and ten minimum wages, there was a fall from 75.8 per cent to 75.0 per cent. In the group earning more than 10 minimum monthly wages, the share remained stable at 71.4 per cent.

In terms of arrears, the proportion of families in arrears in the group with a monthly family income of up to three minimum wages rose from 35.8 per cent in February to 36.4 per cent in March.

In the lower middle class, with incomes between three and five minimum wages, the proportion of defaulters remained at 26.0 per cent in March, the same as in February. In the group earning between five and ten minimum wages, there was an increase from 20.5 per cent in February to 20.7 per cent in March. In the group earning more than 10 minimum monthly wages, the proportion of defaulters fell from 14.6 per cent to 14.3 per cent.

Original Story: Isto é Dinheiro
Translation and Edition: Prime Yield