The volume of sales declined 0.5 percent, down from a revised increase of 3.3 percent in January, the national statistics agency said today in Rio de Janeiro. Economists had predicted a fall of 0.3 percent, according to the median estimate from 34 analysts surveyed by Bloomberg. Sales rose 9.6 percent from a year earlier.
“The economy, which had been growing below potential, isn’t showing significant strength in the first quarter either,” Leonardo Sapienza, chief economist for Banco Votorantim SA, said in a telephone interview from Sao Paulo.
Brazil last month extended tax cuts for appliances including washing machines and refrigerators to stimulate consumer spending that’s been driving economic growth amid a global slowdown and shrinking output by manufacturers hurt by currency gains. Since August, President Dilma Rousseff’s administration has also reduced the benchmark interest rate five times and pledged to boost public investments to achieve economic growth of 4.5 percent this year.
In the minutes of its March 6-7 meeting, the central bank said there’s a “high probability” that the benchmark Selic rate will fall to just above its record low 8.75 percent and stay there.
While rate cuts have so far been slow to fuel consumer demand, pressure on banks to lower their lending rates will eventually stimulate retail sales and economic growth in the coming months, said Solange Srour, chief economist at BNY Mellon ARX Investimentos.
“We don’t expect a strong recovery in the short term because credit is not adding any purchasing power,” Srour said by telephone from Rio de Janeiro. “Still, the scenario is one of higher consumption in the second half of the year, spreads will fall and you have a lot of fiscal stimulus.”
Clothing and shoe sales saw the biggest monthly sales decline, falling 3.6 percent in February. Office supplies, computers and telecommunications equipment sales rose 3.1 percent, the statistics agency said.
The yield on the interest rate futures contract maturing in January 2013, the most traded in Sao Paulo today, rose two percentage points to 8.7 percent at 10:12 a.m. Brasilia time. The real declined 0.37 percent to 1.8335 per dollar.
Brazil’s economy grew 2.7 percent last year, less than Germany and its second-weakest performance since 2003. Economists in the latest central bank survey forecast growth to rebound to 3.2 percent this year and 4.2 percent in 2013.
The bank, in the minutes to its last meeting, said that domestic demand remains robust, thanks to near-record low unemployment and strong credit growth.
The tax cuts on white goods will aid manufacturers including affiliates of companies such as Panasonic Corp. (6752) and Samsung Electronics Co. Ltd. Makers of furniture, wallpaper, lampshade and flooring industries will also benefit.
The broader retail index, which includes the sale of cars and construction materials, rose 2.5 percent from the previous year, the statistics agency said.
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