Brazil Retail Sales Unexpectedly Fall on Supermarket Purchases

Brazil’s retail sales declined in February, surprising analysts who had forecast an increase, as the government continues to take measures to spur the world’s second-biggest emerging market.

The volume of sales fell 0.4 percent, after rising a revised 0.5 percent in January, the national statistics agency said today in Rio de Janeiro. The number was lower than estimated by all 30 analysts surveyed by Bloomberg, whose median estimate was for sales to gain 1.5 percent. From the year earlier, sales fell 0.2 percent, the first annual decline since November 2003, compared with a forecast for a 3.5 percent increase from 27 economists surveyed.

The broader retail index, which includes the sale of cars and construction materials, rose 1.2 percent from the previous year, the statistics agency said.

As industrial production in Latin America’s largest market declined over the past year, President Dilma Rousseff’s government has introduced dozens of measures intended to prop up domestic demand. The central bank has kept its key rate at a record low for its past three meetings in a bid to boost activity after the economy last year posted its worst performance since 2009. On April 1 the government extended until year-end a tax cut on car sales that would have expired that day.

Swap rates on the contract maturing in January 2014, the most traded in Sao Paulo today, rose 10 basis points, or 0.10 percentage point, to 8.00 percent at 9:48 a.m. local time. The real strengthened 0.2 percent to 1.9697 per U.S. dollar.

Personal Items

The retail sales fall was led by a 1 percent drop in supermarket sales, a 2.9 percent drop in sales of personal and domestic items, and a 2.1 percent decline in sales of fuels and lubricants. Those falls were partially offset by a 5.2 percent increase in sales of office equipment and materials.

Brazil’s gross domestic product expanded 0.9 percent in 2012, down from 2.7 percent in 2011 and 7.5 percent in 2010. Economists in the latest central bank survey forecast growth of 3 percent this year, with 5.7 percent inflation. The central bank targets inflation of 4.5 percent plus or minus two percentage points.

To contact the reporter on this story: David Biller in Rio de Janeiro at dbiller1@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net

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