Brazil February Retail Sales Pace Slows on Supermarket Fall

Brazil’s retail sales in February rose less than the previous month, as volume in supermarkets and hypermarkets fell.

Sales rose 0.2 percent in February after increasing 0.4 percent in January, the national statistics agency said today in Rio de Janeiro. That was in line with forecasts by 36 economists surveyed by Bloomberg, whose median estimate was for a 0.2 percent increase.

As inflation accelerates toward the upper limit of the government’s target, the central bank has continued raising its benchmark Selic. Higher borrowing costs and reduced purchasing power have damped consumer confidence, even as shoppers benefit from a stronger currency that makes imports cheaper. With the worst drought in more than 40 years pushing up food prices, consumers are holding back, according to Jankiel Santos, chief economist at Banco Espirito Santo de Investimento.

“Whenever you see a food price spike, you see some deceleration in supermarket sales,” Santos said by phone from Sao Paulo. “We’re going to see an accommodation in foodstuff prices and income catching up, and this tends to lead to some recovery in sales.”

Swap rates on the contract maturing in January 2015 fell one basis point to 11.07 percent at 10:03 a.m. local time. The real was little changed at 2.2137 per U.S. dollar.

Sales of food products, beverages and tobacco at hypermarkets and supermarkets declined 0.3 percent in February, after a 0.7 percent increase in the prior month. Sales of fuels and lubricants rose 1.6 percent after a 1.8 percent increase in January.

Carnival Celebrations

Retail sales jumped 8.5 percent from the same month last year, above the median forecast of 8.1 percent. The increase was the biggest since October 2012. The broader retail index, which includes cars and construction materials, increased 8.4 percent from a year ago, the agency said today, compared with the previous month’s rise of a revised 4.7 percent.

Annual figures were boosted by the fact that Carnival celebrations this year took place in March, rather than February as in last year, Alberto Ramos, chief economist for Latin America at Goldman Sachs Group Inc., wrote in a note to clients.

Brazil’s jobless rate was 5.1 percent in February, a record low for the month, which has boosted income and helped sustain retail, according to Santos. The real this year has appreciated 6.7 percent, more than all other major currencies tracked by Bloomberg and following a 13 percent depreciation last year.

Seeking Credit

The number of consumers seeking credit contracted 3.2 percent in the first quarter compared with the same period in 2013 due to faster inflation, higher rates and lower consumer confidence, consumer credit-rating firm Serasa Experian said yesterday. Credit delinquency jumped to 4.2 percent in March, the highest level since October 2012.

The central bank has raised the Selic rate in nine consecutive meetings to 11 percent from a record-low 7.25 percent a year ago. Inflation accelerated to 5.91 percent in 2013 from 5.84 percent in 2012, and analysts surveyed by the bank expect it will accelerate to 6.47 percent this year, just below the ceiling of the target range.

Prices rose 6.15 percent in the year through March, exceeding all estimates from analysts surveyed by Bloomberg, the statistics institute reported April 9. Policy makers target inflation of 4.5 percent, plus or minus two percentage points.

Lower Confidence

Consumer confidence has tumbled since mid-2012 and in February reached its lowest level in more than 4 1/2 years, according to the Getulio Vargas Foundation. It rebounded slightly in March. Consumer spending accounted for 62.5 percent of gross domestic product in 2013.

Brazil’s economy grew 2.3 percent in 2013, with family consumption growing at the same pace, its slowest in a decade. GDP expanded at an average annual pace of 2 percent since Rousseff took office in 2011, the slowest three-year pace in a decade.

The statistics institute on April 17 will release inflation data for the month through mid-April and March unemployment data.

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