The package of measures announced by the government to contain fuel and cooking gas prices due to the cost of oil on the international market – which has risen 59% this year, although slightly slowed by the provisional ceasefire agreed between the US and Iran – does not shield consumer sentiment . It remains positive, but exposed to the unease generated by the unstable external scenario affecting businesses.
Research from the Brazilian Institute of Economics of the Getulio Vargas Foundation (FGV Ibre) reveals that the Consumer Confidence Index rose 2 points in March, ending the quarter at 88.1 points. The Construction Confidence Index followed a similar trend – rising 2.1 points to 93.6 points.
Despite the uncertainty stemming from the armed conflict, which has undermined expectations for six consecutive weeks, this recently released pair of indicators was positively influenced primarily by domestic variables: the start of the Selic rate reduction process by the Central Bank (BC), the expectation that further cuts are coming, and that the labor market will remain strong and income levels favorable.
In contrast, the Trade Confidence Index and the Services Confidence Index experienced significant declines. Also in March, the former fell 2.7 points to 84.6 points, and the latter 1.8 points to 88.4 points. The Business Confidence Index retreated 0.4 points to 91.9 points, marking its second consecutive drop, while the Economic Uncertainty Indicator, more sensitive to the external scenario due to the media coverage of the conflict, jumped 9.2 points to 115 points. This is higher than 110 points, which already indicates high uncertainty.
These negative data reflected unfavorable expectations for the near future, driven by the Iran war, which was on hold for two weeks but in full swing in March, global developments, uncertainties about the duration of the conflict, and also about the impacts resulting from rising oil prices, risks to the fertilizer supply chain, and perceptions regarding rising inflation, especially in food , pointed out Anna Carolina Gouveia, an economist at FGV responsible for monitoring the economic uncertainty indicator, when presenting the data at the end of March.
Additionally, companies , attentive to the statements of the Central Bank president Gabriel Galípolo regarding the need for caution amidst global instability, do not rule out the possibility that the Selic rate – currently at 14.75% – will fall less than expected by the end of the year, with the Central Bank adopting a more vigilant stance regarding inflation expectations and the increase in consumer debt.
This is despite the government's willingness to adopt new measures to ease the financial burden on debtors – a Herculean task that may, however, only bring temporary results and postpone debt payments, in addition to compromising the Severance Indemnity Fund (FGTS) as a kind of "insurance" for workers if withdrawals to settle debts are approved.
Regarding indebtedness, the National Confederation of Commerce of Goods, Services and Tourism (CNC) published the Consumer Indebtedness and Default Survey for March. The survey showed an expansion in the percentage of families with debts due, to 80.4%, renewing the record of 80.2% registered in February. However, the entity identified positive stability in delinquency at 29.6%.
Nevertheless, CNC projections show that indebtedness is expected to continue rising in the first half of this year until the effects of the monetary policy easing, which began on March 18, reach the consumer. As for default rates, their pace will depend on possible inflationary impacts from items such as energy and fuel on household budgets.
Dollar in favor of the government.
However, the positive consumer sentiment at the end of the first quarter could be dampened by higher food prices, says economist José Francisco Lima Gonçalves, professor at FEA/USP, with a master's and doctorate in Economics from Unicamp. "Food inflation is likely to be a shock," he warns.
Speaking to NeoFeed , Lima Gonçalves explained that even with demand cooling due to the restrictive monetary policy, food prices do not follow this logic. “The typical reaction of these prices is on the supply side. Discounting seasonal effects, there is the weather, transportation costs, medium-term effects on production costs, commodity price shocks, and exchange rate fluctuations,” he listed.
The professor believes that the only "remedy" the government could use to address the rising food prices, which represent a significant portion of family budgets, would be inventory management. And even then, only for certain products. But he acknowledges that inventory management policies "don't fall from the sky." On the contrary, they require investments in logistical infrastructure, as well as investment in building the inventory itself.
"In short, this policy requires planning and financing of the food sector and the stockpiles created. And managing all of this implies a significant financial cost. Furthermore, the initiative would still be subject to criticism, which still exists, regarding what is considered an interventionist state," he states.
Lima Gonçalves adds that strategic reserves are only acceptable in the case of rich countries and cites oil in the Northern Hemisphere. “A combination that meets certain conditions. High commodity prices, including oil, international freight and insurance, with some compensation via exchange rates,” observes the professor, for whom there is no way out for the government other than to incorporate food into the planning of initiatives, “or we will constantly have shortages.”
In the current scenario, the government benefits from the exchange rate, which acts as a mitigator of risks and inflationary pressures. In recent days, the dollar has fallen below R$ 5.10 – the most favorable rate in two years. Year-to-date through Thursday, April 9th, the drop is 7.5%, adding to the 11.2% fall observed in 2025.
