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Brazil household consumption falls

News, 31 August 2015

SAO PAULO: On top of the news that consumer confidence in Brazil has fallen to its lowest level ever, a new study says that household consumption declined 7.5% in the first half of the year.

Last week the country's main consumer confidence index, produced by the Getulio Vargas Foundation (FGV), stood at 80.6 points, down from 82 points in July – this on a 1-to-200-point range, with 100 considered an indicator of neutral sentiment.

This was the lowest reading since FGV started compiling the index in 2005 and the organisation's economists said it reflected Brazilians' fears about the economic situation, including inflationary pressures, interest rate increases and job security.

Inflation has reached 9.6% on some counts and, as a study from Kantar Worldpanel demonstrated, is affecting consumer shopping behaviour.

The research firm reported a 7.5% fall in Brazilian household consumption in the first half of 2015 compared to the same period a year earlier and said the average price of shopping basket items had risen 8.5%.

But where previously consumers had coped by shopping less often and buying more on each trip, now they are not only shopping less often but buying less per trip.

"We see clearly that Brazilian families can no longer maintain their buying patterns," said Christine Pereira, commercial director at Kantar Worldpanel, noting "an intense rationalisation in purchasing decisions".

In keeping with these trends, the one sales channel to show first half growth – of 18% – was the atacarejo, a self-service wholesale-retail hybrid.

Interestingly, Kantar Worldpanel's study also found that some added-value product categories – such as salad dressing and frozen potato – were showing double-digit growth.

Pereira put forward two reasons for this development. One was convenience and practicality "given a lifestyle that provides less time for household activities".

The other was a greater domestic focus. "With the crisis, fewer families are eating out and are bringing occasions and special meals back home, " she said.

Data sourced from PR Newswire, Nasdaq; additional content by Warc staff