Brazil’s retail sales fall surprisingly in May; private consumption likely to contract again in Q2

Brazil’s retail sales dropped surprisingly in May by 1 percent on month-on-month terms. It was worse than consensus expectations of a drop of 0.4 percent month-on-month. The revised print of April was a rise of 0.3 percent. The broad retail sales indicator that includes construction material and vehicles fell 0.4 percent month-on-month and 10.2 percent on year-on-year basis in May.

The retail sales figures support the view that Brazil’s private consumption and economic activity continue to be quite subdued, noted BBVA in a research report. Even if better performance was anticipated for the month, the worst in terms of growth is over, added BBVA. Brazil’s economic growth and private consumption is likely to shrink again in the second quarter of 2016; however, not as much as seen in 2015.

Out of Brazil’s eight sectors gauged by the nation’s statistics agency, six sectors recorded reduced sales in May from April. Personal and consumer goods dropped 2.4 percent, whereas pharmaceutical and cosmetics declined 0.8 percent in May. Food, beverages and tobacco products’ sales at hypermarket and supermarket remained stable following an increase of 1 percent in the prior month.