The percentage of families that declare being indebted in Pernambuco reached 80.9% in August, setting the third consecutive month of increase in the rate. The data comes from the Consumer Indebtedness and Default Survey (PEIC), with a survey carried out by the National Confederation of Commerce of Goods, Services and Tourism (CNC), with a local cut from Fecomércio-PE.
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The number of indebtedness has already advanced 2.8% compared to January this year and 4.5% compared to August 2020. Since May this index has remained high, at 8 out of 10 families, and approaching the mark of 81 %, a value that was last observed 10 years ago, in July 2011. The number of families who say they are unable to pay their debts continues to worry about the advance seen between April and August, a period in which it grew by 12.0 % to 15.1%.
To get a sense of debt, 12.3% of families said they were heavily indebted in August 2020 and, now in 2021, they are 20.2%. The proportion of families who declared that they did not have debts such as post-dated check, credit card, overdraft, store booklet, payroll-deductible loan, personal loan, car and house payments was 23.6% in August 2020 and it dropped to 19.1% in August 2021.
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The main form of indebtedness, reported by 97.0% of families, is credit card. In addition to cards, payment slips (25.2%), overdrafts (8.8%), special credit (8.4%) and vehicle financing (7.3%) also stand out. All these types of credit increased when compared to the level estimated in August of the previous year.
Social and economic factors drive indebtedness
With high inflation in the state, a bad job market, with lower salaries, and lower emergency aid this year, a tighter budget has led to greater use of credit cards to meet basic needs, triggering an alert for the increase financial obligations of households.
The survey also points out that some debts are being made to pay other bills, such as payroll and personal credits and overdraft facilities, which are used to settle overdue debts, including the credit card itself.
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Contrary to what was observed until 2020, the current scenario of rising interest rates makes the picture worrying, as new free credit contracts increase indebtedness and bring the risk of increasing default in the coming months.
The state’s debt situation is greater than the national level. The PEIC data for Brazil registered in August a record percentage of indebted families in the country (72.9%), but the percentage of families with overdue accounts remains stable in the short term (25.6% in July and August) and lower than that observed in August 2020 (26.7%). Likewise, the proportion of families unable to pay their arrears is smaller and declining: 12.1% in August 2020, 10.9% in July 2021 and 10.7% in August this year.
This increase in indebtedness and inability to honor debts by families in Pernambuco is due to the reduction in purchasing power, due to the constant increase in prices for essential items in the basic food basket and other prices with a relevant impact on the family budget, such as that of fuels and electricity.
In the short term, prices in the services sector should also increase, which consumers should notice throughout the second half, especially at this time of reopening, as many activities that were paralyzed due to the pandemic will return, but still without the strength that meet the potential demand of the sector as a whole in the state.
Source: BoF Pernambuco
Edition: Vanessa Gonzaga