July 28 (Bloomberg) -- Brazil's growth in consumer spending will slow more than the country's gross domestic product as interest rates rise, hurting sales of everything from automobiles to shoes, Itau Corretora de Valores SA said.

``Personal consumption could fall at twice the rate of GDP between 2008 and 2009, which could lead to a greater deceleration in sales than envisioned,'' Itau analyst Ricardo Fernandez wrote in a note to clients.

A combination of lower unemployment and rising incomes and credit had spurred spending in Brazil, where retail sales jumped 10.5 percent in May. The central bank, in an attempt to slow inflation, raised its benchmark interest rate by three-quarters of a percentage point last week to 13 percent.

``The fall won't happen right now, but more towards the end of year,'' Itau Corretora economist Luiz Gustavo Cherman said in a telephone interview, referring to consumer spending. The economy takes an average of two or three quarters to show the effects of a rate decision, he said.

Personal consumption growth may slow to 5.2 percent in 2009 from 7.9 percent this year, Fernandez wrote. Rising inflation will also cut into consumer spending, the analyst predicted.

Lojas Renner SA, Brazil's biggest clothing retailer, dropped the most in a week after the report, falling 3.4 percent to 30.90 reais in Sao Paulo. Natura SA, Brazil's biggest cosmetics company, slid 2.7 percent to 18.00 reais.

To contact the reporter on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net or Fabiola Moura in New York at +1- fdemoura@bloomberg.net

Last Updated: July 28, 2008 16:13 EDT