Core retail rises again, confirming a timid rebound

Brazilian core retail sales rose by 1.1 percent in September, according to data released Wednesday by the Brazilian Institute of Geography and Statistics (IBGE). The results are the strongest since March and mark the third month of improving rates, after the sector lost steam month after month between January and June. 

“Since May, retail has either remained stable or dipped,” said IBGE’s Cristiano Santos. “This year, the sector is becoming less volatile and behaving more similarly to the pre-pandemic period,” he adds.

Only two of the eight surveyed segments saw sales drop: furniture and appliances, affected by high interest rates, and items for personal or domestic use. Still, sales in most segments remain below their pre-pandemic levels. The ones outperforming February 2020 levels are also in areas which experienced scorching inflation in recent years: pharmaceuticals, fuels and lubricants, groceries, and construction materials.

Broad retail, which includes construction materials and vehicle sales, was in September up by 1.5 percent against August — but 1.5 percent below pre-pandemic.

Vehicle production in Brazil fell by 12.7 percent between August and September. Anfavea, an association of car manufacturers, highlighted that the sector has been hurt by double-digit interest rates. The Selic benchmark rate sits at 13.75 percent — and the Central Bank recently said that it “will not hesitate to resume the tightening cycle if the disinflationary process does not proceed as expected.”