As Brazilians' wages witnessed only a discrete increase of 3.6 percent in 2007, it failed to justify the 6.7-percent growth of consumption for the same year, during which credit, meanwhile, had an expansion of some amazing 28.8 percent.
Industry and commerce were able to establish a clear relationship between credit and consumption and abusively offered the client to pay for goods in up to 10 monthly installments.
For example, an ironing board worthy of just 15 US dollars can be paid for in between six to 10 installments. Not to mention the automobile industry, which has increased the term of installment payment for a car to six or even seven years.
When a sales down seems to come, sellers simply create new programs that offer longer terms of installment plan and smaller monthly installments to rekindle the purchase desire inside consumers.
As a result of such approaches, the total amount of credit offered in December of 2007 registered a 160-percent increase compared with the figure of December of 2002, and was likely to grow even further. 8
Since the beginning of the 2008 calendar year, Brazil's reasonably well-controlled inflation rate of 4.46 percent has shown more signs of going up.
This has alarmed the central bank, which said on March 13 that it was considering raising interest rate if necessary to contain the inflation expectation after holding the base interest rate steady for the fourth consecutive time at 11.25 percent annually.
Maintaining the situation under control and keeping Brazil's economy on track in 2008 will be a big challenge for the government which had been quite successful to bring the country into the Golden BRIC, a term created by the economists of Goldman Sachs for the world's four most prosperous emerging economies – Brazil, Russia, India and China.
(Xinhua News Agency March 25, 2008)
