More than half of Brazil’s households near insolvency

Within this group of families worried about their own financial condition, one-fifth of households are already in debt or behind on bills. Of those, nearly 25% live in cities in the Northeast, an electoral stronghold of President Luiz Inácio Lula da Silva.

At the other end of the spectrum, one-quarter of households say they are financially comfortable. The largest share of these homes is in Southern Brazil, at 23%, and in Minas Gerais, Espírito Santo and the interior of Rio de Janeiro, at 20%, areas where purchasing power is higher than the national average.

Only one in every 100 Brazilian households says it is very comfortable with its bills.

The data were collected in 2025 by research firm NielsenIQ (NIQ) for its Homescan survey, obtained by Valor. The survey is one of the most traditional in the segment and gathers regular data from 8,200 households in Brazil. Globally, it covers 250,000 households in 25 countries, allowing NIQ to map families’ purchasing behavior.

“Regarding the regions, the highlight is the greater representation of the Northeast among the most affected households. This makes sense when we look at the region’s volume consumption performance, which has been contracting more than the national average over the past 15 months,” said Gabriel Fagundes, NIQ’s director of industry insights, based on the company’s surveys.

Fábio Bentes, chief economist at CNC, the national confederation of commerce and services, said the Northeast stands out because it includes lower-income areas, which are penalized in a context of worsening macroeconomic conditions, pressured by rising debt and delinquency since 2025 and, now, by the recent return of food inflation.

Average monthly income among workers in the North (R$2,238) and Northeast (R$2,015) is below the national average (R$2,851), according to preliminary data from the 2022 Census released in October by the Brazilian Institute of Geography and Statistics (IBGE).

A Valor survey based on IBGE’s Monthly Retail Survey shows that, in the 12 months through March, five of the 10 states with the weakest sales growth by volume were in the North and Northeast: Piauí, Tocantins, Amazonas, Roraima and Pará.

“This oil shock caused by the conflict in the Middle East hits the lower-income population directly. Some of these consumers believe that if they don’t drive, they are protected from higher fuel prices, but they don’t know that 80% of the food they consume is transported by truck on highways,” Bentes said. Fuel prices are rising even after recent government subsidy measures.

Between March and May, S10 diesel posted the biggest increase, up 17.1%, followed by diesel (15.1%), regular gasoline (5.7%), premium gasoline (5.2%), compressed natural gas (5.1%) and cooking gas cylinders (4.3%), according to data from ANP, Brazil’s oil, natural gas and biofuels regulator.

Regional gaps widen

A closer look at the figures shows that an important divide is emerging between geographic regions, which tends to raise social inequality levels. There is also a widening gap in rates within individual states.

In São Paulo state, for example, considering all households in poor financial condition, the share of indebted households in the interior is almost double, at about 18%, the level seen in Greater São Paulo, at 9.3%, a significant gap within the same geographic area.

In the Northeast, however, the gap is of a different kind: of the 20.5% of households with financial problems in Brazil identified by NIQ in 2025, 24.3% are in the region. At the same time, among households in a comfortable situation, 14.3% are in the Northeastern states.

That means a substantial difference of 10 percentage points between the shares, the largest gap among regions in the survey.

Marcelo Pimentel, a former executive at Walmart, drugstore chain Drogaria São Paulo and food retailer GPA, said Brazil is experiencing consumption polarization. “Brazil has been a country that grows at different speeds even within the same geographic regions and, in this scenario, the country does not become poorer in a homogeneous way, but in a fragmented way, with the super-rich still having a lot of money because of these high interest rates, while the lower middle class is being heavily penalized,” he said.

In the case of Minas Gerais, Espírito Santo and the interior of Rio de Janeiro, which form a single geographic area in the study, there is also a relevant difference between the indicators, but in the opposite direction from the Northeast.

These three areas account for less than 14% of the overall group of highly leveraged or financially struggling households. Their share among households with a comfortable economic life, however, is just over 20%.

Minas Gerais, which is part of this more positive data set, is Brazil’s second-largest voting bloc. Rio de Janeiro, another highlight in this group, is the third-largest.

São Paulo city and Greater São Paulo also have a larger share of people in a comfortable financial situation, at 10.6% of the total, than indebted households, at 9.3%.

Inflation as top concern

The NIQ material also shows that inflation has returned as consumers’ biggest concern, ahead of crime and security. In third place was having “enough money to pay bills and live well.” Broadly speaking, surveys on the issues with the biggest impact on the presidential election have placed these topics in the overall ranking, with their positions varying.

An April Genial/Quaest poll put violence as Brazil’s main problem, with corruption in second place, cited by 19% of respondents, followed by social problems, at 16%, and health, at 14%. Inflation had not yet been mentioned.

Leandro Consentino, a political scientist and professor at Insper, said corruption should gain ground in electoral surveys because of new findings in the Master case involving senator and presidential hopeful Flávio Bolsonaro. The economic agenda should also remain prominent because of the deterioration in the macro environment. “Even with the government’s action through [debt renegotiation program] Desenrola 2.0 and fuel subsidies, the war hit people’s living conditions, and the one who suffers is whoever holds the pen, whether at the federal or state government level,” he said.

A few weeks ago, Belmiro Gomes, chief executive of Assaí, Brazil’s second-largest cash-and-carry chain, with R$85 billion in annual sales, told analysts on a conference call that “a price change is already visible in some product categories.”

Until April, inflationary pressure was being felt in a more controlled way. “These are products that are more affected because of the conflict that is unfolding. We should see stronger impacts now, in May and June, since in April most operators in the sector still had older inventories,” the executive said.

“Unfortunately, when there is cost pressure, we have to pass on the costs we had.” According to Gomes, given the level of household debt and the current interest rate of 14.5%, inflation will put even more pressure on low-income consumers.

Similarly, Tulio de Queiroz, chief financial officer at Mateus, a retail and cash-and-carry chain with R$40 billion in annual revenue, said the market has “little price elasticity,” meaning it is not accepting price adjustments, which makes management more difficult for retailers.

“At a time when it is difficult to bring in volumes, it is essential to work on expenses precisely because of the pressure from operational deleveraging [when expenses may grow more than revenue],” Queiroz told an analyst last week. “Thinking that because I lower prices I will sell more, often you don’t sell more and you make your top line [revenue] worse. So this is a very, very difficult trade-off,” he said.

Pimentel, the former CEO of GPA, owner of the Pão de Açúcar supermarket chain, said this environment creates a negative outlook for companies, which end up postponing investments to protect cash for long periods because of high interest rates, something that tends to affect future planning.

Lower-income consumers under pressure

According to NIQ’s study, lower-income consumers, earning up to two minimum wages, spend more than 60% of their income on food and hygiene items. In the middle-income bracket, household expenses are under growing pressure: home bills now absorb more than 50% of spending among families earning between three and five minimum wages.

Secondary spending, including leisure, eating out, internet and phone services, and clothing, fell by 0.2 and 0.4 percentage point as a share of household budgets in 2025 compared with 2024. Other debt, health expenses and household bills rose by the same range, between 0.2 and 0.4 percentage point.

At the start of the month, with an eye on the worsening situation among the lower-income population, the government launched the second edition of Desenrola Brasil, a debt renegotiation program offering discounts of up to 90%. But progress was still modest one week after it began.

Investment bank BTG Pactual released a 12-page study on the 11th to assess the potential impact of the new program on consumption and household deleveraging. R$1 billion was renegotiated in seven days, with 200,000 settlement requests for an amount eligible for the program estimated at R$62 billion to R$77 billion, based on calculations by BTG Pactual and investment platform XP. Credit bureau Serasa data from March show 82 million indebted people.

BTG Pactual analysts Tiago Berriel and Bruno Martins said an issue dates back three years, to “Desenrola 1”, which reduced leverage among the groups that benefited but did not generate a new round of credit at lower interest rates for these groups, putting more pressure on these families.

“The improvement in balance sheets appears to have been captured more by banks and/or redirected to lower-risk groups, while the direct beneficiaries started carrying the renegotiated installments,” the analysts said.