As Brazil enters the closing quarter of 2025, consumer sentiment and spending patterns reveal a complex picture shaped by economic pressures and shifting priorities. Persistent inflation, high interest rates, and global uncertainties continue to dampen confidence, yet signs of resilience and adaptability remain visible across generations and spending patterns. From selective splurging on tangible goods to a renewed focus on travel experiences, Brazilian consumers are making deliberate choices in how they allocate their resources. This article explores the latest trends in sentiment, spending intentions, and generational shifts, offering insights into the evolving economic and cultural landscape.
The following charts showcase the findings from our latest ConsumerWise research.
Consumer confidence in Brazil continues to face challenges, with net sentiment—the gap between optimism and pessimism—currently seven percentage points lower than in November 2024. This is less than half of the net sentiment level from the third quarter of 2023, showing a continuous decline over two years. Ongoing geopolitical volatility, elevated interest rates, and persistent inflation—particularly in food prices—continue to weigh on consumer sentiment and drive pessimism.
Despite these economic pressures, retail sales in Brazil continue to grow. While total units sold are down, higher prices are driving revenue growth, reflecting both inflationary pressures and consumers’ willingness to spend selectively on certain categories. This resilience is underpinned by Brazil’s strong job market, with low unemployment rates over the past couple of years providing a stable foundation for consumer spending.
Although net sentiment remains below previous heights, it has improved over the last quarter. Among baby boomers, optimism declined by five percentage points from May, while pessimism fell more sharply, dropping 16 points. This decline in pessimism may reflect this generation’s growing sense of resilience or adaptation to economic challenges, along with a cautiously positive outlook on long-term stability despite current headwinds.
Emerging trends in consumer spending intentions across Brazil reflect a notable shift in priorities. Similar to patterns observed globally, Brazilian consumers are trying to find new ways to save by becoming more selective—cutting back on certain essentials and semi-discretionary items while allowing room to splurge in other areas. One of the most striking examples is the significant decline in spending on meat, largely a result of persistently high prices.2 This trend is primarily attributed to supply constraints, with a growing share of Brazil’s meat production3 being directed to export markets.
In contrast, spending on gasoline and fresh produce continues to show positive momentum, indicating that these categories remain priorities for Brazilian consumers despite broader economic pressures.
Discretionary spending intentions are down in nearly all categories, with international travel standing out as the sole exception. As spring and summer approach, consumers are expressing a stronger appetite for travel, demonstrated by increased intent to spend on related expenses. Compared to the previous quarter, interest has grown across several travel categories, including cruises, international flights, gasoline, and short-term rental accommodation. This upward trend suggests that, despite a general caution in discretionary spending, consumers are increasingly prioritizing travel experiences.
Across most generational groups, fewer consumers are trading down compared to the previous quarter. Baby boomers saw the largest decline, with 13 percentage points fewer opting to trade down. Gen Z and Gen X experienced smaller but similar reductions. Millennials, however, broke the trend, registering a three-percentage-point increase in trading down—though this shift remains within the margin of error.
Switching to lower-priced or discounted retailers and adjusting quantity or pack sizes of purchased goods remain the two most common ways consumers choose to trade down.
These trends align with shifts in net sentiment over the same period. As sentiment rises among boomers, Gen Z, and Gen X, these generations show less inclination to trade down. In contrast, millennials’ relatively unchanged sentiment is reflected in their steady yet cautious approach to spending.
We’ve observed a marked rise in splurging on apparel, beauty and personal care, and footwear. This uptick is likely driven by the holiday shopping season and the onset of spring, as consumers refresh their wardrobes and prepare for social outings. The trend points to selective indulgence, where consumers prioritize specific categories while remaining cautious with their overall expenses.
Interestingly, beauty and personal care emerges as the second-highest splurge category for the first time, echoing insights from our State of the Beauty report. The report identifies Brazil as a key growth market for the beauty industry, driven by rising incomes and a growing emphasis on self-care and appearance among consumers.
Unlike in the United States and Europe, where dining out is a top splurge category, Brazilian consumers focus more on tangible goods, underscoring cultural and seasonal differences. Globally, our State of the Consumer report highlights that Gen Z is more likely to splurge than other generations, particularly on fashion and beauty, reflecting their focus on self-expression.
This pattern of selective spending suggests that while overall budgets remain tight, consumers—particularly Gen Z—are willing to invest in categories that align with their immediate needs and lifestyle priorities.
Despite showing signs of resilience and adaptation, Brazilian consumers still face a difficult economic environment. Generational differences in sentiment and spending behavior show diverse responses to these pressures—all while retail sales continue to grow. Overall, discretionary spending remains subdued, but pockets of optimism and shifting priorities suggest that consumers are finding ways to balance caution with moments of indulgence.
To explore more insights or connect with us for further information, visit our ConsumerWise page.
Brazil’s economy is stable, but consumers are feeling down
Despite low unemployment and strong GDP growth, Brazilian consumers are feeling the pinch. Some more than others—McKinsey’s latest consumer survey shows a generational divide in consumer confidence.
Brazil’s economic sentiment has taken a hit. Overall, consumers are more pessimistic about the state of Brazil’s economy than they were last year or even last quarter. At first glance, this shift seems counterintuitive given the country’s robust economic landscape. Unemployment has fallen to 6.2 percent, almost the lowest level on record, and GDP is hovering at around 3 percent.4 However, this positive momentum is overshadowed by persistent inflation, at 4.83 percent, and rising interest rates.5 These two factors are likely the biggest contributors to the decline in consumer optimism. This trend is seen in some generations and income groups more than others. Younger generations may be unaccustomed to inflationary pressure, and it is causing financial strain for low- and middle-income groups.
The charts below showcase key findings from our latest ConsumerWise survey.
Brazil’s consumer sentiment takes a hit: Inflation squeezes wallets but spares the wealthy
Consumer optimism in Brazil dropped by five percentage points in the first quarter of 2025 compared to the last quarter of 2024. Notably, this dip occurred despite strong market confidence and robust spending during the holiday season. Inflation remains a worry for many; the number of consumers that cite rising prices as a source of concern is up by eight percentage points from the last quarter—but this is less the case for high-income individuals.
Optimism has declined most sharply among younger generations, while Boomers and Gen X have experienced a rise in positive sentiment. Despite this increased optimism among older generations, more Boomers and Gen X are reporting reductions in their household spending. In contrast, younger generations are showing the opposite trend, with a greater share increasing their spending.
Shifting priorities: Cruises surge, dining out dips, and travel plans flip
Following a robust shopping season, consumers are reverting to spending on essentials and semi-discretionary goods instead of discretionary items. Categories such as apparel, entertainment (both at home and away), and footwear experienced declines—an expected trend following the end-of-year holiday sales.
One notable exception is cruise bookings, which surged by 29 percentage points. This is surprising given this category’s 30 percentage-point drop from Q4 2023 to Q1 2024, indicating a non-seasonal fluctuation.
Additionally, there are significant changes in dining and travel habits. Consumers plan to dine out less but intend to spend more on meat, dairy, and fresh produce. International flight bookings rose by 14 percentage points, while domestic flights, hotels, and short-term housing rentals saw a decline.
Trade-down twist: Boomers tighten belts, Gen Z eases up
Trade-down behavior remains prevalent, with 89 percent of consumers reporting they traded down in the past quarter. Interestingly, despite growing optimism, Boomers have intensified their trade-down habits, while Gen Z reduced their trade-down practices despite a dip in optimism.
Furthermore, the nature of trade-down behavior is evolving. Fewer consumers are switching to lower-priced or private-label brands or changing retailers for lower prices or discounts. Instead, more consumers are adjusting pack sizes and quantities to manage their budgets. This contrasts with trends in the United States and the European Union, where consumers are increasingly opting for private brands.
Splurge surge reverses: Gen Z tightens up, Boomers hit the brakes
Following the end-of-year shopping season, splurge spending returned to the regular levels seen throughout most of 2024. Even so, changes are emerging across age groups and income brackets, highlighting the complexity of consumer spending habits.
Gen Z and Boomers have significantly cut back on splurge spending, likely due to overspending in the prior quarter. In contrast, Millennials and Gen X continue to exhibit slightly elevated splurge levels, mirroring their holiday-season behavior.
Examining income levels reveals further complexity. Low-income consumers are maintaining their usual spending patterns outside of holiday periods. Meanwhile, fewer high-income consumers plan to splurge compared to last quarter, although their splurge levels remain significantly higher than in the first half of 2024.
Post-holiday splurge shake-up: Gen Z ditches apparel, Millennials prioritize experiences
Overall, splurge spending has decreased by six percentage points from the last quarter, aligning with 2024 levels and indicating a typical post-holiday decline.
Apparel and footwear remain the top splurge categories, but younger generations are pulling back on these items, as well as on beauty and personal-care products.
Spending on out-of-home entertainment and dining out shows mixed trends. Younger generations are increasing their spending in these areas, reflecting a shift in their social activities. Travel spending is also rebounding among Millennials after a decline in the previous quarter, as their focus shifts away from other discretionary categories that typically consume more of their budget during the holiday shopping season.
Despite Brazil’s robust economic performance, consumer sentiment remains fragile and is heavily influenced by persistent inflation and rising interest rates. The impact varies across generations and income levels, with younger and lower-income groups feeling the pinch most acutely. As economic pressures mount and lifestyles evolve, spending priorities are shifting. To contact us for more information or to read additional insights, check out our ConsumerWise page.
About the author(s)
Bruno Furtado is a senior partner in McKinsey’s São Paulo office, where Pedro Fernandes is a partner.
The authors wish to thank Claudia Zaroni, Diego Bach, and Eitan Urkowitz for their contributions to this article.
Brazilian consumer optimism rebounds in line with economic growth
While the country’s consumers are increasingly optimistic and expect to spend more, they remain inclined to trade down and reluctant to splurge.
As of early August, Brazilian consumers were feeling more optimistic about the economy compared with the three months leading up to the end of June, although their optimism remains below 2023 levels. Despite higher-than-expected inflation in June, the country’s central bank maintained interest rates at 10.5 percent.6 In addition, a tight labor market is driving wage increases across Brazil, which in turn is boosting consumer spending. Below we showcase findings from our latest ConsumerWise research conducted in Brazil in late July and the first week of August.
Optimism rebounds, driven by high-income consumers
Optimism in Brazil rebounded, with 38 percent of consumers in our research expressing confidence in the country’s economic conditions, compared with 33 percent in the second quarter. Notably, the share of consumers with mixed feelings about the economy has fluctuated as the percentage of those pessimistic about the economy has remained stable throughout 2024, hovering between 18 and 20 percent. While high-income consumers drove this optimism—44 percent feel positive about the economy—that figure was down from 52 percent late last year, reflecting the generally lower rate of optimism relative to most of 2023. The findings also show significant generational differences, with Gen Z notably less optimistic than older peers, which is unsurprising given the high youth unemployment rate.1 Inflation remains a primary concern, with 50 percent of respondents citing rising prices as a top issue, compared with 43 percent in the June quarter. Younger generations are markedly less optimistic, given their lack of experience with the hyperinflation of the 1980s and 1990s, making current inflationary pressures more impactful.
Greater economic optimism boosts intent to spend
The rebound in economic optimism is translating into increased intent to spend. Brazil’s consumers are planning to spend more on a range of essential, semidiscretionary, and discretionary items relative to the previous quarter, with some notable categories experiencing significant shifts, including jewelry, meals at sit-down restaurants, furniture, and toys. Intent to spend varies among age groups. Gen Z consumers plan to spend more on fitness and furniture; millennials on cruises, home improvement, and toys; and baby boomers on wellness products. Despite relatively stable spending intentions this year, overall consumption is exceeding market expectations and fueling GDP growth.
Consumers continue actively trading down to save money
The number of consumers switching to cheaper products in the past three months has increased by seven percentage points year over year to 31 percent, continuing a consistent trend toward trading down. More medium- and high-income respondents reported delaying purchases compared with the second quarter, while fewer low-income consumers did so. This is likely because low-income consumers can’t deprioritize essential items, which consume most of their disposable income, while medium- and high-income consumers can afford to postpone purchasing nonessential splurge items. Baby boomers are adjusting their behavior more than any other age group, with 94 percent trading down compared with 84 percent in the three months ending in June. The percentage of baby boomers changing brands or delaying purchases has increased by double digits. Conversely, far fewer Generation X consumers are delaying purchases, adjusting quantities or pack sizes, or changing retailers. Notably, approximately one-third of respondents reported using “buy now, pay later” services—roughly double the rate observed in the United States, Mexico, and the five biggest European economies. Buy now, pay later is a popular payment method in Brazil, where the digitalization of payments has facilitated its growth.
Consumers are optimistic but cautious about splurging
Despite general optimism about the state of Brazil’s economy, the number of baby boomers planning to splurge in the next three months dropped significantly, from 38 percent to 29 percent. By contrast, a generation both pessimistic about the economy and more likely to belong to a lower income group—Generation Z—indicated an intention to splurge. Overall, 54 percent of Gen Z consumers planned to treat themselves this year, up from 49 percent in the second quarter.
More optimistic generations are increasing their splurge purchases
While rebounding consumer optimism is not translating into general plans to splurge—as evidenced by a decline in the number of consumers intending to spend on top categories such as apparel, footwear, groceries, beauty and personal care, and out-of-home entertainment—there are generational differences. Millennials show an increased inclination to splurge in nearly all categories except beauty and personal care products, while Generation X appears to be shifting its splurge purchases from footwear and beauty products to restaurants and entertainment away from home. Last, more high-income respondents plan to splurge compared with the previous quarter, while medium- and low-income consumers cut back on discretionary spending. An exception is dining out, where more plan to splurge during the next three months.
Brazil is seeing evidence of more optimistic consumers with growing faith in their household finances and a willingness to spend. But this renewed optimism may be tempered by higher-than-expected inflation and an elevated youth unemployment rate. Watch this space for regular updates on the state of the Brazilian consumer. To contact us for more information or to read additional insights, check out our ConsumerWise page.7
About the author(s)
Bruno Furtado is a senior partner in McKinsey’s São Paulo office, where Pedro Fernandes is a partner.
The authors wish to thank Andrea Leon, Claudia Zaroni, Diego Bach, Eitan Urkowitz, Giovanna Correa de Castro, and Silvana Lee for their contributions to this article.
