Brazilian retail suffers a third consecutive drop in July

A day after Brazil’s services sector figures came in above market expectations, the country posted retail numbers that headed in the opposite direction. Sales volume was down by 0.8 percent in July, the third consecutive monthly drop. 

The retail sector has so far posted 0.4-percent growth year-to-date — but that is exclusively down to a good performance at the beginning of the year. In the 12-month comparison period, the sector is down by 1.8 percent.

July’s poor results saw drops in nine out of ten segments, including vehicles and construction sales. The clothing and footwear segment once again posted paltry numbers (-17.1 percent). 

“Some of the large commercial chains showed a reduction in revenue, especially in the footwear sector. In addition, there may also be consumer choices involved, considering the reduction of current consumption capacity,” says Cristiano Santos, the survey’s manager.

Even though inflation has started to ease, consumer prices remain very high, while entry-level wages are on a downward trend. Moreover, recent household consumption has concentrated more on services than consumer goods.

Meanwhile, the only retail segment that registered a bump was fuel and lubricants (12.2 percent), as a direct result of the government’s measure that capped state taxes on fuel, which resulted in price reductions. Fuel prices dropped more than 14 percent in the July inflation reading.

In addition, due to the negative retail results for the rolling quarter ended in July, the retail sector is now practically at the same level as it was in the pre-pandemic period, up only 0.5 percent from February 2020. 

“This level has already been much higher. In July 2021, it was 5.3 percent higher than in February 2020,” said Mr. Santos.

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