Brazilian SMEs face shrinking margins due to rising costs

Small and medium-sized enterprises (SMEs) in Brazil are facing shrinking profit margins due to rising inflation and increasing operational costs. Entrepreneurs are struggling to balance rising expenses for raw materials, payroll, and taxes without passing the full cost increase on to consumers.

According to data from IBGE, while the IPCA recorded a deflation of 0.32% in August, it has accumulated a 4.22% increase over the last 12 months. A Serasa Experian survey highlighted this pressure, noting that 47% of SMEs classified cost pressure as high or very high in the preceding year, with 49% reporting a reduction in profitability.