Brazil’s economic sentiment has taken a hit. Overall, consumers are more pessimistic about the state of Brazil’s economy than they were last year or even last quarter. At first glance, this shift seems counterintuitive given the country’s robust economic landscape. Unemployment has fallen to 6.2 percent, almost the lowest level on record, and GDP is hovering at around 3 percent. However, this positive momentum is overshadowed by persistent inflation, at 4.83 percent, and rising interest rates. These two factors are likely the biggest contributors to the decline in consumer optimism. This trend is seen in some generations and income groups more than others. Younger generations may be unaccustomed to inflationary pressure, and it is causing financial strain for low- and middle-income groups.
The charts below showcase key findings from our latest ConsumerWise survey.
Despite Brazil’s robust economic performance, consumer sentiment remains fragile and is heavily influenced by persistent inflation and rising interest rates. The impact varies across generations and income levels, with younger and lower-income groups feeling the pinch most acutely. As economic pressures mount and lifestyles evolve, spending priorities are shifting. To contact us for more information or to read additional insights, check out our ConsumerWise page.
While the country’s consumers are increasingly optimistic and expect to spend more, they remain inclined to trade down and reluctant to splurge.
As of early August, Brazilian consumers were feeling more optimistic about the economy compared with the three months leading up to the end of June, although their optimism remains below 2023 levels. Despite higher-than-expected inflation in June, the country’s central bank maintained interest rates at 10.5 percent. In addition, a tight labor market is driving wage increases across Brazil, which in turn is boosting consumer spending. Below we showcase findings from our latest ConsumerWise research conducted in Brazil in late July and the first week of August.
Brazil is seeing evidence of more optimistic consumers with growing faith in their household finances and a willingness to spend. But this renewed optimism may be tempered by higher-than-expected inflation and an elevated youth unemployment rate. Watch this space for regular updates on the state of the Brazilian consumer. To contact us for more information or to read additional insights, check out our ConsumerWise page.
About the author(s)
Bruno Furtado is a senior partner in McKinsey’s São Paulo office, where Pedro Fernandes is a partner.
The authors wish to thank Andrea Leon, Claudia Zaroni, Diego Bach, Eitan Urkowitz, Giovanna Correa de Castro, and Silvana Lee for their contributions to this article.
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