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Under inflationary pressure, retail has worst month of the year in May

retail inflation pressure
Furniture and home appliances brought Brazil’s retail figures down with decreased demand. Photo: Joa Souza / Shutterstock.com

Retail sales grew 0.1 percent in May compared to April, according to official data. This is the fifth positive result of the year, but the sector’s worst performance in 2022. Year-to-date, the sector increased 1.8 percent. However, over the 12-month period, retail is down 0.4 percent.

According to Cristiano Santos, survey manager at the Brazil’s Institute of Geography and Statistics (IBGE), the result was well below market expectations and shows a scenario of stability from April to May, but with much less intense growth than at the beginning of the year.

Among the eight activities surveyed, six had positive results. While the pharmaceutical sector saw the biggest growth in the month (3.6 percent) — mainly due to drug price increases authorized by the government in April — the furniture and home appliances category pulled the result down (-3.0 percent). After extraordinary demand for these products last year, they have become less important in household budgets.

In addition, all categories felt the brunt of inflation, in the double digits for ten months in a row. In May, there was a 0.4-percent bump in retail revenue versus a 0.1 percent change in volume, which shows that Brazilians are not buying more, they are just spending more money on the same products — and with lower wages.

“The biggest example is the supermarket sector, which from April to May grew 1 percent in volume and 4.1 percent in revenue, that is, four times more, signaling, above all, food inflation,” says Mr. Santos.