The decline in confidence was caused by unfavorable perceptions of both the present and the future. This is clear in the evolution of the two ICC components: the Current Situation Index (ISA) fell 0.8 points to 82.6 points, and the Expectations Index (IE) fell 2.5 points to 91.3 points in January.

Responses of lower-income consumers to the FGV survey were noteworthy, she added. According to her, for respondents with a monthly income of up to R$2,100, the figure fell by 3.6 points in January. And, among consumers with a monthly income between R$2,100 and R$4,800, confidence dropped by 4.6 points.

“Throughout 2025, we had employment, income, and [lower] inflation stimulating consumption,” Gouveia said. “And credit interest rates were on the more negative side [of consumption intentions]. But, at the turn of the year, these factors [high interest rates, more expensive credit] began to weigh a little more,” she added. “And when we look at it from an income perspective, it was mainly lower-income [consumers] who pushed the result down.”

Gouveia pointed out that lower-income consumers are also the ones with less room in their budgets for new purchases.

She also highlighted the fact that households are still highly indebted, inhibiting consumption.

However, Gouveia was cautious when asked if the ICC would continue to fall in the coming months, given the likely continuation of high market interest rates and high levels of indebtedness. For her, the trajectory of the index cannot be projected with certainty, as there are positive and negative factors influencing consumption in 2026.

Regarding positive factors that can influence domestic consumption, she mentioned the entry into force of the income tax exemption for those who earn up to R$5,000 per month, which can help boost consumption, especially among low-income households.

“Inflation is more controlled, and this income tax issue will help a lot [the consumption of] very low-income households,” she said. “But, on the other hand, we already have signs of an economic slowdown,” she noted. “We have high interest rates and indebtedness, which I think are very negative factors that weigh or will end up weighing on the consumer at some point, even if the supply of credit remains. Because consumers will only become more indebted,” she said. “I think we need to evaluate a little more, wait two or three months, to understand what the trajectory [of the ICC] would be,” Gouveia concluded.

*By Alessandra Saraiva — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/