Brazil January Retail Sales Rise More Than Analysts Forecast

Brazil’s retail sales rose more than economists forecast in January, as consumer spending continues to support a recovery in the world’s second-biggest emerging market.

The volume of sales rose 0.6 percent, after declining a revised 0.4 percent in December, the national statistics agency said today in Rio de Janeiro. The increase was the largest since October. The median estimate from 30 economists surveyed by Bloomberg was for sales to gain 0.4 percent. From the year earlier, sales increased 5.9 percent, compared with a 5.5 percent forecast from 29 economists surveyed.

The broader retail index, which includes the sale of cars and construction materials, rose 7.1 percent from the previous year, the statistics agency said.

Latin America’s largest economy posted its slowest growth since 2009 last year, as investment and industrial output fell while consumer spending jumped 9.8 percent. President Dilma Rousseff has sought to strengthen the retail sector by exempting its payroll taxes starting in April and extending sales tax cuts. The central bank on March 6 kept its benchmark rate at a record low 7.25 percent for the third straight meeting despite inflation that has accelerated since July.

Swap rates on the contract maturing in January 2014, the most traded in Sao Paulo today, fell 13 basis points, or 0.13 percentage point, to 7.83 percent at 9:12 a.m. local time. The real strengthened 0.1 percent to 1.9709 per U.S. dollar.

Office Equipment

The retail sales rise was led by an 18.5 percent jump in office equipment and materials and a 4.7 percent increase in personal and domestic items.

Rio de Janeiro-based retailer Lojas Americanas reported on March 7 fourth-quarter sales of 3.8 billion reais, 8.7 percent higher than estimated by analysts surveyed by Bloomberg and up from 3.1 billion reais the prior year. The company said it expects to nearly double the number of stores it has in 2013 as compared to 2009.

Brazil’s gross domestic product expanded 0.9 percent in 2012, down from 2.7 percent in 2011 and 7.5 percent in 2010. The economy will expand 3 percent to 4 percent this year, Finance Minister Guido Mantega said March 1. Economists in the latest central bank survey forecast growth of 3.1 percent.

The slower pace of growth has not tamed inflation, which accelerated for the eighth straight month in February, to 6.31 percent, near the top of the central bank’s target range. The bank targets inflation of 4.5 percent plus or minus two percentage points.

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