Brazil Retail


Retail sales drop for the first time since April 2010

In February, retail sales (excluding cars and construction) contracted 0.4% over the previous month after seasonal adjustments. The reading, which contrasted a 1.1% rise in January, undershot analysts' expectations of a flat reading. On an annual basis, however, growth in retail sales remained stable at the 8.2% tallied in January. Annual growth rates are likely to decrease further due to an unfavourable base effect, as retail trade rose at a double-digit pace during most of 2010. The decrease, which marked the first negative reading since April 2010, was driven by weaker trade of furniture and home appliances (-2.8% month-on-month) as well as books (-4.7% mom). Meanwhile, in February, the broad index, which includes automobiles and construction materials registered flat growth over the previous month, with vehicles sales dropping 1.1% mom followed by a 1.5% mom decrease in construction materials trade. The drop reflects higher borrowing costs for the acquisition of automobiles, as the Central Bank tightened policy in order to slow the pace of credit growth. Owing to a high comparison base, annual average growth in retail sales moderated from 10.7% in January to 10.4% in February.

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