BRASILIA – Brazilian savings accounts suffered a record blow in the first half of this year amid double-digit inflation that has eroded disposable income in Latin America’s largest economy.
From January to June, bank savings saw an outflow of 50.5 billion reais ($9.44 billion), central bank figures showed on Thursday, the worst number for the period of the series starting in 1995.
The balance of savings accounts ended the semester at 1.01 trillion reais.
Withdrawals took place amid surging consumer prices. Inflation in the 12 months to mid-June hit 12%, well above the central bank’s target of 3.5%, pressured by rising commodity prices.
To combat persistent inflation, the central bank has already taken the country’s benchmark interest rate to 13.25% from a record low of 2% in March last year and has signaled another hike for August.
With higher interest rates, savings rates have also become less competitive compared to other fixed income investments in Brazil, helping to motivate outflows.
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($1 = 5.3485 reais)
(Reporting by Marcela Ayres; Editing by Sandra Maler)