Brazil Pulse - Gradual Recovery Trend of Consumption Confidence is Being Confirmed - October 2016

Consumer confidence index reaches 78 points and signals a gradual upturn. Outlook for the next 6 months, which gave signs of improvement in the last readings, continue to confirm themselves.

The gradual recovery trend of consumption confidence is being confirmed. However, politically speaking, the feeling Brazilians have is still negative or of uncertainty regarding the new Government. Ongoing reforms may have strong impact on its image.

Context

Confidence in the country: gradual recovery trend of confidence in the country

In October indicators of the Pulso Brasil showed that the recovery trend of the confidence in the country is on its course, but still at a slow pace.

This trend is explained by the end of the impeachment process, but according to the data from Pulso Brasil (exclusive to subscribers) the recovery is still not full due to:

1. the stagnated economy;
2. institutional and moral crisis of the Brazilian policy and its main players;
3. doubts regarding the ability of President Temer in conducting the required changes in the country.

Economic context

Consumer confidence: the gradual recovery trend is being confirmed

The recovery of consumption confidence is slowly being confirmed. In October, the CCI was 78 points, 4 points above the index seen in September.

This improvement is explained by the perception that the situation will be better in the next 6 months. The natural optimism of Brazilians that is combined with the inflation reduction forecasts for 2017.

Regardless that this confidence is recovering, it is not possible to currently see any reflection on consumer’s behaviour. Attitudes regarding consumption habits practically remain the same as those of the last months: cost reductions, change of more expensive brands for private label brands and shopping at cheaper supermarkets and the wholesale stores are very strongly present in the daily lives of Brazilians.