Brazil’s December retail sales sink historic 6.1% as pandemic, food inflation bite

RIO DE JANEIRO, BRAZIL – Brazilian retail sales slumped 6.1% in December, official figures showed on Wednesday, the biggest fall for that particular month and the second largest of all since comparable records began more than 20 years ago.

Researchers at government statistics agency IBGE said the fall was due a loss of momentum from the record level of sales in the preceding two months, the second wave of the COVID-19 pandemic picking up, and high food price inflation.

The 6.1% monthly fall was second only to April’s 17.2% plunge at the height of the initial lockdown and quarantines last year, and far more than the 0.5% decline forecast in a Reuters poll of economists.

“The survey results tend to have minor variations, but the pandemic has changed that,” said IBGE survey manager Cristiano Santos. “December’s fall is a natural repositioning (from) the very high levels of October and November.”

This meant that retail sales in Latin America’s largest economy rose 1.2% last year from 2019, the fourth year-on-year rise in a row, although the slowest of all.

Sales volumes in December also rose 1.2% from the same month a year earlier, IBGE said, less than the 6.0% rise forecast in a Reuters poll.

All eight retail sectors surveyed showed a fall in sales in December. Personal and domestic items fell 13.8%, clothing and footwear fell 13.3%, and office and communication equipment sales fell 6.8%, IBGE said.

On a wider basis, including cars and building materials, retail sales in December fell 3.7% on the month, and rose 2.6% from December 2019, IBGE said. Last year, sales by this measure fell 1.5% from 2019.

With a second wave of the virus sweeping the country and inflation still higher than policymakers would like, the outlook for the first quarter is not particularly bright.

Central bank President Roberto Campos Neto said this week that economic growth in the first quarter will be weak, and many economists are forecasting an outright contraction.