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Indicator for September saw strongest rise since August 2020

09/27/2022


Driven by favorable expectations, the Consumer Confidence Index (ICC) rose by 5.4 points in September, compared to August, to 89 points, the highest since January 2020 (90.4 points), think tank Fundação Getulio Vargas (FGV) reported Monday. It was the strongest rise of the indicator since August 2020 (7.7 points), said Viviane Seda, the coordinator of the foundation’s surveys.

Speaking about the result, Ms. Seda added that consumers have a big expectation of a lower inflation scenario in the coming months — which opens room, in the family budget, for more purchases. At the same time, the recent signs of improvement in employment also indicate to Brazilians a good prospect for September in the income from work, with hopes of continuity and good job generation.

However, she gave a warning about 2023. “We will have a challenging economic scenario for the next administration, with possible tight fiscal policy, and the possibility of a global economic slowdown,” she said. This, in practice, casts doubt about the maintenance of expressive increases in the ICC in the long-term horizon.

When detailing the evolution of the ICC from August to September, the economist highlighted the impact of rising expectations. In the two sub-indicators of the ICC, the Present Situation Index (ISA) rose 1.6 points to 73.3 points in September, compared to August; but the Expectations Index (IE) advanced more, with a 7.6-point rise to 100.2 points. “This increase in expectations was the highest since August 2020 [12.3 points],” she said.

This greater confidence in the future also favored the financial situation in the next six months. This indicator rose to 100.8 points in September, the highest level since January 2020 (81.7 points), with an increase of 10.4 points in September compared to August, the highest since November 2018 (12.7 points).

The fact that elections are just around the corner also helped to raise expectations of a more positive financial situation in the future. She said that a new administration — or even reelection — usually brings hope of a better scenario for the economy and, consequently, for the household budget. “No wonder that the increase in the financial situation indicator was the most intense since 2018,” she said, recalling that that year was also a presidential election.

But she stressed that the elections are not yet set. Ms. Seda also said that there is no way to know exactly how the macroeconomic environment will be in 2023. “There is no way to say that this confidence will continue to improve,” she said.

*By Alessandra Saraiva — Rio de Janeiro

https://valorinternational.globo.com/