By The Rio Times | Created at 2025-01-27 22:38:09 | Updated at 2025-02-01 00:03:17
4 days ago
Brazilian consumer confidence tumbled in January 2025, reaching its lowest point since February 2023. The Getulio Vargas Foundation (FGV) reported that the Consumer Confidence Index (ICC) fell by 5.1 points to 86.2, marking the sharpest decline in over three years.
Rising food prices and persistent inflation concerns primarily drove this downturn. The National Consumer Price Index-15 (IPCA-15) increased by 0.11% in January, with food and beverage prices surging 1.06%. Tomato prices soared by 17.12%, while ground coffee rose 7.07%.
Economic uncertainty further dampened consumer sentiment. Both the Current Situation Index and Expectations Index declined for the second consecutive month. The ISA dropped 3.3 points to 79.4, while the IE fell 6 points to 91.6.
Financial worries weighed heavily on consumers, with the “future financial situation” component plummeting 6.7 points. High inflation, elevated interest rates, and ongoing household debt contributed to this pessimism.
Brazil’s central bank faces a challenging balancing act. It aims for a 3% inflation target in 2025, with a tolerance range of 1.5% to 4.5%. However, the IPCA ended 2024 at 4.83%, driven by food price increases.
The government recognizes the urgency of addressing food inflation. President Lula plans to meet with ministers to discuss potential interventions. The National Supply Company (Conab) aims to resume public food stocks and create a distribution network for small businesses.
This significant drop in consumer confidence underscores the challenges facing the Brazilian economy as it grapples with inflationary pressures and attempts to balance growth with price stability.
