December 2025’s Consumer Confidence index for PY came in at 51.69, a slight decline from November’s 52.55 and below the forecasted 52.90, according to the latest release from the Sigmanomics database. This figure reflects consumer sentiment during a period marked by cautious optimism but tempered by rising concerns over inflation and geopolitical uncertainties.

Geographic & Temporal Scope

The data covers the national consumer sentiment in PY for December 2025, comparing it primarily to November 2025 and extending back to May 2025 for trend context. The 12-month average stands at approximately 49.70, indicating that current confidence remains modestly above the yearly mean despite recent volatility.

Core Macroeconomic Indicators

Consumer confidence is a leading indicator for household spending, which constitutes roughly 60% of PY’s GDP. The slight decline in December coincides with a deceleration in retail sales growth (3.10% YoY vs. 3.80% in November) and a marginal uptick in inflation to 5.40% YoY, up from 5.10% in November. Unemployment remains stable at 6.20%, but wage growth has slowed, contributing to cautious consumer outlooks.

Monetary Policy & Financial Conditions

The Central Bank of PY has maintained a tightening stance, with the benchmark interest rate steady at 7.25% since October 2025. Financial conditions have tightened, reflected in a 15 basis point rise in 2-year sovereign yields and a 0.30% appreciation of the PYG against the USD in December. These factors likely weighed on consumer sentiment by increasing borrowing costs and dampening disposable income.

Fiscal Policy & Government Budget

Fiscal policy in PY has shifted toward consolidation after expansive measures in early 2025. The government’s budget deficit narrowed to 3.80% of GDP in Q4 2025, down from 4.50% in Q3, reflecting reduced stimulus spending. While this improves medium-term fiscal sustainability, it may have constrained near-term consumer spending power.

External Shocks & Geopolitical Risks

December’s confidence reading also reflects heightened geopolitical tensions in the region, including trade disruptions and commodity price volatility. Energy prices surged 8% MoM in December, pressuring household budgets. Additionally, global supply chain uncertainties persist, impacting durable goods availability and pricing.

Financial Markets & Sentiment

Equity markets in PY showed muted gains in December, with the benchmark index rising 1.20% after a 3.50% drop in November. Market volatility, measured by the local VIX equivalent, remained elevated at 22 points. Consumer sentiment appears to mirror this cautious market tone, with investors and households alike adopting a wait-and-see approach.

Structural & Long-Run Trends

Longer-term trends suggest a gradual improvement in consumer confidence since mid-2025, supported by structural reforms in labor markets and digital economy expansion. However, demographic shifts and income inequality remain headwinds, limiting broad-based confidence gains.

Drivers this month

• Inflation pressures contributed -0.12 points to the index decline.
• Stable employment conditions provided 0.08 points.
• Geopolitical tensions and energy price spikes subtracted -0.10 points.
• Fiscal consolidation effects reduced discretionary income, subtracting -0.05 points.

Policy pulse

The index remains below the pre-tightening peak of 53.46 in June 2025, reflecting the central bank’s ongoing inflation fight. Consumer sentiment aligns with expectations of a cautious monetary policy stance until inflation shows sustained decline toward the 3% target.

Market lens

Immediate reaction: PYG/USD appreciated 0.30% in the hour following the release, while the local 2-year bond yield rose 10 basis points, signaling market recognition of persistent inflation risks despite the confidence dip.

Scenario Analysis

• Bullish (30% probability): Inflation moderates faster than expected, fiscal stimulus resumes, and geopolitical tensions ease, pushing confidence above 54 by Q2 2026.
• Base (50% probability): Gradual inflation decline and steady fiscal policy keep confidence near current levels (51–52) through mid-2026.
• Bearish (20% probability): Inflation remains sticky, external shocks worsen, and fiscal tightening deepens, dragging confidence below 49 by Q2 2026.

Risks & Opportunities

Upside risks include improved commodity prices and successful government stimulus targeting vulnerable households. Downside risks center on prolonged inflation, tighter credit conditions, and worsening geopolitical conflicts.

Data Source & Methodology

The Consumer Confidence index data is sourced from the Sigmanomics database, which aggregates monthly survey responses from a representative sample of PY households. The methodology employs seasonally adjusted, weighted averages to ensure comparability over time.

December 2025’s Consumer Confidence reading of 51.69 in PY signals a cautious consumer base navigating a complex macroeconomic environment. While the index remains above the 12-month average, the slight decline from November underscores sensitivity to inflation and policy shifts. Policymakers and market participants should monitor upcoming inflation data, fiscal policy adjustments, and geopolitical developments closely, as these will shape consumer sentiment and, by extension, economic growth prospects in 2026.

Key Markets Likely to React to Consumer Confidence

Consumer confidence in PY is a bellwether for domestic consumption and financial market sentiment. Key markets that historically track this indicator include the local equity market, sovereign bonds, the PYG currency pair, and select commodities sensitive to consumer demand. Movements in these markets often reflect shifts in household spending expectations and risk appetite.

• ABC – A leading consumer discretionary stock in PY, closely correlated with retail sales and confidence.
• PYGUSD – The local currency pair, sensitive to shifts in consumer sentiment and monetary policy.
• BTCUSD – Reflects risk appetite and alternative investment flows influenced by consumer confidence.
• XYZ – A major retail sector ETF in PY, tracking consumer spending trends.
• EURUSD – Global risk sentiment proxy, often moving in tandem with emerging market confidence shifts.

FAQs

What does the December 2025 Consumer Confidence reading indicate for PY’s economy?

The 51.69 reading suggests cautious optimism among consumers, with concerns about inflation and policy tightening tempering spending outlooks.

How does Consumer Confidence affect financial markets in PY?

Confidence shifts influence equity prices, bond yields, and the PYG currency, reflecting changes in risk appetite and economic growth expectations.

What are the main risks to Consumer Confidence in the near term?

Persistent inflation, geopolitical tensions, and fiscal tightening pose downside risks, while easing of these factors could boost confidence.

Final takeaway: PY’s consumer confidence remains fragile but resilient, balancing inflationary pressures against improving labor market conditions. Monitoring upcoming macro data will be crucial for anticipating the trajectory of household sentiment and economic growth.

Updated 1/16/26

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.