Brazil: Strong retail sales buttress private consumption at the outset of 2011
March 15, 2011
In January, retail sales (excluding cars and construction) expanded 1.2% over the previous month after seasonal adjustments. The reading, which followed on a 0.2% rise in December (previously reported as flat growth), overshot analysts' expectations of a 0.8% expansion. On an annual basis, however, retail sales growth moderated from 10.2% in December to 8.2% 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 increase was driven by strong trade of furniture and home appliance sales (+2.7% month-on-month) as well as food and beverages (+1.2% mom). Meanwhile, in January, the broad index that includes automobiles and construction materials decreased 0.2% over the previous month, on the back of a steep 7.1% contraction in sales of vehicles. 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 10.9% in December to 10.7% in January.