Economy

Brazilian retail registers record sales in August due to emergency aid boost

This was the fourth consecutive month of retail growth since the fall of almost 17% registered in April under the impact of COVID-19

Street in Rio de Janeiro. REUTERS/Lucas Landau
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  • The volume of restricted retail sales was 2.6% above the previous peak, registered in October 2014;
  • Over August last year, the increase was 6.1%.

Brazilian retail sales increased 3.4% in August over the previous month, in the seasonally adjusted series, and reached the highest volume in the historical series of the Brazilian Institute of Geography and Statistics (IBGE, in Portuguese), leveraged by the payment of the emergency aid (the Brazilian financial aid created to soften the coronavirus pandemic economic effects) showed data released on Thursday.

The volume of restricted retail sales was 2.6% above the previous peak, registered in October 2014. This was the fourth consecutive month of retail growth since the fall of almost 17% registered in April under the impact of mobility restrictions amid the pandemic. Over August last year, the increase was 6.1%.

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The expectation in Reuters‘ research was up 3.1% in the monthly comparison in August and up 7.00% over a year earlier. In the year, sales volume continues to fall, by 0.9%, and in 12 months, there is an accumulated increase of 0.5%.

For the manager of IBGE’s monthly commerce survey, Cristiano Santos, the recent performance of retail “has a lot to do with emergency aid, which increased the income of low-income families, and with lower interest rates, which increased the supply of credit”.

“This influenced the behavior of going from the bottom to the top,” he told reporters. According to him, in August the sector was 8.9% above February. The expanded retail trade, which also includes vehicles and construction materials, grew 4.6% over July.

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According to IBGE, seven of the ten activities surveyed in expanded retail had positive results in comparison with July, in the seasonally adjusted series. The main highlights were fabrics, clothing, and footwear (+ 30.5%), other articles of personal and domestic use (+ 10.4%), and vehicles and motorcycles, parts, and pieces (+ 8.8%).

At the opposite end, there was a sharp drop in sales of books, newspapers, magazines, and stationery (-24.7%) and a decrease also in the group of pharmaceutical, medical, orthopedic, perfumery, and cosmetics articles (-1.2%) and hypermarkets, supermarkets, food products, beverages and tobacco (-2.2%).

Economist Alberto Ramos, of the Goldman Sachs bank, said in a note to customers that retail sales have shown a solid recovery since April, “supported by large income transfers resulting from increased fiscal spending and the gradual easing of social distance protocols.”

“However, a domestic picture that is still very complex about the COVID-19 and the likely reduction in the fiscal stimulus before the end of the year may soften/weaken the pace of recovery,” he added.

Translated by LABS