Brazil: Retail sales rebound substantially in March
May 12, 2011
In March, retail sales (excluding cars and construction) expanded a seasonally adjusted 1.2% over the previous month. The reading represented an improvement over the 0.3% rise recorded in February (previously reported: -0.4% month-on-month) but came in slightly below market expectations of a 1.3% increase. On an annual basis, retail sales decelerated sharply from 8.5% tallied in February to 4.1% in March. Annual growth rates are likely to decrease further due to an unfavourable base effect, as retail sales rose at double-digit pace during most of 2010. The monthly increase was driven by a rise in the sale of computers and office supplies (+3.5% month-on-month) as well as books (+1.6% mom). Meanwhile, the broad retail sales index, which includes automobiles and construction materials, rose a stronger 1.7% over the previous month, with vehicle sales expanding 3.8% mom and construction materials rising 2.7% mom. Despite the positive month-on-month results, car sales continue to underperform as a result of higher borrowing costs for the acquisition of automobiles, as the Central Bank attempts to contain the pace of credit growth. Owing to a high comparison base, annual average growth in retail sales moderated from 10.4% in February to 9.5% in March.