Inequality in Brazil up, household income drops

Inequality in Brazil up, household income drops
Photo: Luis War/Shutterstock

After some stability in 2019 and a slight decrease in 2020, Brazil’s Gini inequality index rose last year. Inequality has notably advanced in regions where people were more dependent on cash handouts enacted by the government during the early stages of the pandemic, Brazil’s official statistics agency IBGE reported on Friday. 

Per capita average monthly income in Brazil dropped by 6.9 percent in 2021 to BRL 1,353 (USD 270). The drop occurs as earnings from pensions and benefits shrink in the country.

Data shows that all income deciles lost money since 2012 — but the pinch was not felt equally. Among the top 1 percent, income loss was 6.9 percent, but in the bottom 5 percent of income, it reached 48 percent. Last year alone, the bottom 5 percent lost 34 percent of their monthly income.

A new report by consultancy firm Boa Vista shows that the number of Brazilians unable to pay their debts increased by 12.4 percent over the first five months of the year. 

According to Boa Vista, default rates have climbed since 2021 but the trendline is advancing at a faster pace in 2022. 

High inflation (the yearly rate has remained in the double digits since September) has corroded families’ purchasing power and made it a lot more difficult for them to pay their debts without delay. As consumer prices continue to climb, the reduction in Brazil’s unemployment rate has been unable to lower default rates in the country.

Data from the National Confederation of Commerce shows that almost 78 percent of households are in debt — the highest since 2010.