Brazil’s September retail sales rose less than economists forecast, as the central bank carries out the world’s biggest interest-rate increase to tame inflation. Swap rates fell.
Purchases in September rose 0.5 percent from the previous month, after jumping 0.9 percent in August, the national statistics agency said today in Rio de Janeiro. The number was lower than the 0.8 percent median estimate from 38 economists surveyed by Bloomberg. Retail sales rose 4.1 percent from the same month last year, below the median forecast of 4.6 percent.
The central bank will boost the benchmark interest rate for a sixth straight meeting this month in an effort to slow inflation that has remained above target for more than three years, swap rates show. President Dilma Rousseff’s government at the same time has indicated it will eliminate some tax breaks on consumer goods in a bid to improve fiscal accounts. That will affect sales of durable goods, even as near record-low unemployment sustains demand, according to Jankiel Santos, chief economist at Banco Espirito Santo de Investimento.
“Increasing interest rates tends to lead to deceleration, especially in big-ticket items linked more to credit,” Santos said by phone from Sao Paulo. “Some deceleration is going to come, but it’s not going to be very significant due to favorable labor market conditions.”
Swap rates on the contract maturing in January 2015, the most traded in Sao Paulo today, fell 14 basis points to 10.82 percent at 10:11 a.m. local time, the biggest intraday decline since Oct. 3. The real strengthened 0.4 percent to 2.3224 per U.S. dollar.
The broader retail index, which includes cars and construction materials, fell 0.7 percent from the previous month, the agency said today.
The central bank has boosted the benchmark Selic rate by 225 basis points since April, to 9.50 percent. Economists in the latest weekly central bank survey forecast policy makers will raise the rate to 10.25 percent in 2014. They forecast growth of 2.5 percent this year and 2.1 percent in 2014, up from 0.9 percent last year.
Sales of furniture and appliances fell by 0.2 percent, down from a 0.5 percent increase in August and a 2.5 percent jump in July. That reveals the temporary nature of government stimulus, according to Neil Shearing, chief economist for emerging markets at Capital Economics Ltd.
“Consumption seems to have softened a bit after a mini-boom in July and August, and purchase of big-ticket items may be particularly weak,” Shearing said by phone from London.
Brazil will end some tax breaks on consumer goods to shore up public finances, Treasury Secretary Arno Augustin said in an interview at his Brasilia office on Nov. 7.
The biggest sales jump in September was for personal and domestic items, which rose 2.4 percent. Purchases at supermarkets and hypermarkets, including food, beverages and tobacco, rose by 0.6 percent.
“The retail sales numbers came in a little weaker, though without having been a negative number,” Carlos Kawall, chief economist at Banco J. Safra, said by phone from Sao Paulo. “Consumption continues at a good level, even if the data were outside consensus.”
Brazil’s unemployment rate in September was 5.4 percent, matching a historic low for the month. Inflation in October slowed to 5.84 percent from 6.7 percent in June.