Insight Focus
Major supermarket chains and financial institutions reported a drop in consumption over recent months. High interest rates and rising household debt levels are considered the primary reasons for the decline in demand. Bt shifts in consumer habits driven by weight-loss drugs and the rise of online betting are also on the market’s radar.
Brazilians are cutting back on spending. In June, consumption fell by 1.7% compared to May, according to the Daily Economic Activity Index (IDAT) from Itaú Bank, which tracks spending via credit cards and other payment methods. This marked the third consecutive month of decline, signaling an economic slowdown.
Housing and leisure are among the hardest-hit segments, but the food sector is also showing signs of weakening. Demand fell by 1.6% in May and dropped by 0.9% in June, according to Itaú.
Source: Itaú
Financial reports from major supermarket chains confirm the trend. Assaí, one of the country’s largest groups in the sector, recorded a 0.9% drop in same-store sales in the first quarter of the year compared to the previous three months. At Grupo Mateus, a major supermarket chain in the Northeast, the decline was even steeper: same-store sales fell 7.3% in the first quarter.
Reduced Purchasing Power Bites
For large retail groups, the economic environment—characterized by high interest rates and increased consumer debt—is among the primary explanations for the drop in demand.
Source: National Confederation of Trade in Goods, Services, and Tourism.
“Household debt has reached record levels, which translates into reduced purchasing power for socioeconomic classes C, D and E,” said Belmiro Gomes, CEO of Assaí.
Socioeconomic class C includes middle-lower class families (earning between four and 10 times the national minimum wage). Class D is categorized as working class (between two and four times the minimum wage), while class E encompasses “extreme vulnerability” – those earning up to two times the national minimum wage.
It is precisely these socioeconomic classes that make up most of the Brazilian population and serve as the driving force behind consumption. Nearly 70% of workers earn up to two times the minimum wage per month—equivalent to approximately BRL 3,242 (USD 635.40)—, according to the Brazilian Institute of Geography and Statistics (IBGE).
Source: IBGE
High interest rates also weigh on consumers’ pockets. Brazil currently has the highest real interest rate in the world adjusted for inflation projected over the next 12 months, according to a study by market intelligence firms Lev Intelligence and MoneYou. The country ranks behind only Russia, Turkey and Mexico.
The benchmark interest rate, currently at 14.25% per year, drives up the cost of loans and debt refinancing. For credit cards, interest rates on installment plans reach as high as 200% per year, according to the Central Bank. “High interest rates continue to put pressure on household purchasing power, especially for lower-income families,” said Gomes.
Source: Central Bank
Inflation, which has risen by approximately 4.64% over the past 12 months according to IBGE, is also putting pressure on household budgets.
“For the upper classes, the impact may be less visible, but it is significant for lower-income families, who often have to cut back on consumption and even stop buying certain products,” says economist André Braz of the Fundação Getúlio Vargas.
In this scenario, the top of the socioeconomic pyramid continues to sustain a portion of sales, while the base remains under increasing pressure, according to Assaí.
Milk is a prime example. Between 2015 and 2025, consumption fell by nearly 10% according to Euromonitor amid sharp price increases. Over the last five years, the product has seen cumulative price hikes of around 90% due to factors such as declining production and rising herd maintenance costs, according to the Center for Advanced Studies on Applied Economics (Cepea) at Esalq/USP.
Source: Euromonitor
“Much higher prices amid economic tightening naturally cause lower-income populations to rethink their consumption,” says Braz.
And it wasn’t just milk that saw a significant price hike. Between 2019 and 2025, products such as ground and whole-bean coffee saw a cumulative price increase of nearly 250%. Cooking oil and olive oil rose by approximately 118%, and the price of rice went up by 78%, according to a Nielsen survey.
Research by the consultancy shows that rising food prices are currently a top concern for 36% of Brazilian consumers. Against this backdrop, 66% have started looking for cheaper alternatives. About 60% of product categories sold in supermarkets saw a decline in sales volume during the first quarter of this year, according to Nielsen.
The Impact of GLP-1 Drugs
However, the shift in consumption dynamics is not limited to macroeconomic factors. “There are also new phenomena, such as the growing use of weight-loss medications and online betting,” stated Gomes.
The first case is perhaps the most striking. The use of weight-loss drugs has been growing rapidly and is expected to expand further. Sales of these medications rose by nearly 80% between 2021 and 2025, with 7.3 million units sold, according to the Brazilian Association of Pharmaceutical Distributors.
With the arrival of generics earlier this year, UBS bank expects the Brazilian GLP-1 market is expected to double in size, reaching BRL 20 billion (USD 3.9 billion) by December.
In March, the patent expired for semaglutide, the active ingredient in GLP-1 receptor agonist weight-loss drugs that reduce feelings of hunger—as well as cravings for sweets and carbohydrates.
Today, according to Nielsen, about 4.6% of households in Brazil use a medication from this category. This percentage remains low compared to other markets, such as the US, where these products are found in 12% of homes. However, we can already see an impact on consumption patterns.
It may still be too early to assess the true impact of these drugs on the demand for products like sweets and carbohydrate-rich foods. However, some data already point in that direction: sales of items such as cakes and sweet pies have been declining, with a more pronounced drop in recent years.
Source: Euromonitor
At the same time, the consumption of natural and health-oriented products—such as juices made solely from fresh fruit (rather than blends with water), cheese and dietary supplements—is booming. Between 2023 and 2025 alone, the food industry’s demand for packaged cheese grew by approximately 11.7%, according to Euromonitor.
Source: Euromonitor
For most of the population, however, these products end up being unaffordable.
Betting’s Impact on Household Spending
In a challenging environment for consumer spending, the growth of online betting represents another area requiring attention.
Last year, 17% of Brazilians aged 16 and older placed some form of online bet, compared with 15% in 2024 and 14% in 2023, according to a survey by the Brazilian Association of Financial and Capital Markets Entities (Anbima).
Today, the sector generates between BRL 20 billion (USD 3.85 billion) and BRL 30 billion (USD 5.7 billion) in monthly turnover, making Brazil the world’s fifth-largest sports betting market. Of this total, approximately 85% is returned to consumers as winnings, according to the Central Bank.
Although bettors have an average household income of BRL 5,402 (USD 1,063), above the national average of BRL 3,367 (USD 663), according to Anbima, and maintain some capacity to save, the rise of online betting has raised concerns about its potential impact on household finances and consumption.
A survey by the Locomotiva Institute indicates that spending on betting is already impacting family expenses. About 48% of bettors report cutting back on spending at bars, restaurants and food delivery services, while 41% have reduced spending on clothing and accessories (respondents could select multiple answers).
“The typical bettor profile includes individuals from lower-income groups, who live on a tight budget. Any additional expenditure, especially on betting, can compromise income and consumption,” says Andreas Bethanis, Head of Research at Peers Consulting + Technology, which conducted a study on the potential impact of betting on household spending.
Anbima data shows that for 39% of bettors, the primary motivation for gambling is to secure funds for emergencies, while for 37%, betting represents a chance to win big money. Another 32% say online gambling is merely a form of entertainment.
However, about 40% of bettors end up in debt due to betting, according to a survey by the São Paulo Consumer Protection and Defense Program (Procon).
In a sensitive economic climate marked by a contraction in consumer spending, this could be a first warning sign. For now, betting accounts for less than 0.5% of household spending, according to Brazilian government data, but that share could grow.
“The retail sector risks losing billions in annual revenue due to the diversion of consumer spending toward betting,” says Bethanis. “Combined with other factors already impacting household budgets, the outlook is not encouraging.”
