Private consumption in Peru shows moderation, but entertainment and fashion are growing.

In November, private consumption behavior in Peru showed signs of moderation, according to the BBVA Research Big Data Index for Private Consumption. This index, which measures the variation in spending by Peruvian households, decreased from 12.4% in October to 8.4% in November. The decline in the growth rate can be attributed to a context where withdrawals from pension funds have been less frequent, impacting families' spending capacity. Despite this overall slowdown, certain sectors have experienced significant growth. Notably, spending in entertainment, fashion, and beauty, as well as household goods, has increased. Surprisingly, while spending on education and health has decreased, entertainment has reached remarkable figures, which could reflect a shift in the consumption priorities of Peruvians. Vanessa Belapatiño, an economist at BBVA Research, points out that the entertainment sector has seen an increase in its growth, rising from a variation of 43.1% in October to 44.4% in November. Additionally, purchases in fashion and beauty have shown a recovery, moving from a decline of 2.6% to a growth of 2.1%. The household sector has also shown improvements, going from a contraction of 3.1% to a growth of 5%. In contrast, spending on education has decreased, with a drop from -1.7% in October to -1.9% in November. In the health sector, the variation has also been negative, falling from a growth of 10.7% in October to 7.2% in November. This could indicate that families are prioritizing entertainment and the consumption of everyday goods over spending on education and health, which are typically considered essential. Belapatiño believes that the entertainment sector is likely to continue its positive trend in the coming months. The economist argues that, among non-essential categories, entertainment has been at the forefront in terms of growth. She also suggests that other segments, such as fashion and beauty, could follow this path. Regarding tourism, Belapatiño highlights that although this sector still faces challenges, signs of improvement are emerging. Ticket purchases are on the rise, which could indicate a resurgence of interest in travel that had been postponed during the pandemic. Tourism has significant potential, although its recovery is slower compared to other sectors. A more detailed breakdown of Peruvians' spending preferences in entertainment reveals that bars and nightclubs, as well as casinos and lotteries, account for a significant portion of total spending in this category. In concrete numbers, casinos and lotteries represent 29% of total entertainment spending, while cultural activities such as cinema and theater make up 20%. Belapatiño attributes the growth in consumption to improvements in formal employment indicators. Since the third quarter of 2024, there have been advances in job quality and a decrease in informal and unemployment rates. This has allowed Peruvians to have better purchasing power, which is reflected in their consumption habits. The decline in inflation rates is also mentioned as a positive factor that encourages consumption. Price stability has allowed households to feel more secure in their spending, contributing to the recovery of private consumption. However, a slowdown in growth is anticipated for December, as a depletion of the liquidity that households had accumulated through fund withdrawals is expected. Projections for the fourth quarter of the year suggest private consumption growth between 3% and 3.5%, allowing for a year-end growth close to 2.6%. Looking ahead to 2025, a slight deceleration is expected, although still with growth exceeding that recorded in the first two quarters of 2024. Growth for the entire year is estimated to be around 2.4%. Finally, a notable change in payment patterns has been observed in the preference for card usage over cash. Approximately 67% of transactions are made with cards, reflecting a shift in consumption habits driven by the accelerated digitalization during the pandemic. Belapatiño concludes that this change in payment methods has also contributed to the transformation of consumption behavior in the country.