Economy

Retail sales grow again in Brazil in February, but COVID-19 gives no respite

New measures to restrict circulation affected the sector, normally benefited in this period by spending on returning to school

Consumers on a commercial street of Rio de Janeiro.
Consumers on a commercial street of Rio de Janeiro. September, 2020. Photo: REUTERS/Ricardo Moraes/Archive
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  • According to the Brazilian Institute of Geography and Statistics (IBGE), the sector presented a 0.6% increase in sales in February over the previous month, after accumulating losses of 6.3% in December and January, months in which the federal government provided no financial emergency aid;
  • When compared to February 2020, sales dropped 3.8%.

After two months of losses, retail sales in Brazil increased again in February, driven by spending linked with school return. The COVID-19 pandemic, however, gives no respite, and new restrictions on circulation imposed to contain infections are expected to affect sales in March and April.

According to the Brazilian Institute of Geography and Statistics (IBGE), the sector presented a 0.6% increase in sales in February over the previous month, after accumulating losses of 6.3% in December and January, months in which the federal government provided no financial emergency aid. When compared to February 2020, sales dropped 3.8%.

The retail sector in Brazil is now facing toughening measures against the novel coronavirus when the country is becoming the pandemic’s global epicenter. High unemployment rates and inflation add to the obstacles facing national trade.

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“The new restrictions on mobility across the country combined with accelerating inflation, unemployment, and the payment of emergency aid to a lesser extent than in 2020, are factors that should contribute to the loss of traction in Brazilian trade in the short term,” assessed the economic team from Brazilian bank Original in a note. “For 2021, however, we still expect growth in the sector, sustained by the gradual recovery from the pandemic and the reversal of the precautionary savings made by the wealthiest families last year,” the bank added.

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In February, four of the eight activities surveyed were up, with the largest growth being registered by books, newspapers, magazines, and stationery sales, of 15.4%. “January is a month of extraordinary tax bills, so lower consumption as a whole is common. In February, we have the monthly budget of families returning to greater normality and the return of students to schools, heating purchases school supplies,” describes IBGE’s research manager, Cristiano Santos. However, this last activity fell by 41% compared to February 2020 because many schools have not yet resumed activities or face-to-face classes.

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The activities of furniture and household appliances (9.3%), fabrics, clothing and footwear (7.8%) and hypermarkets, supermarkets, food products, beverages and tobacco (0.8%) also increased in February and January.

In the so-called expanded retail trade, which includes vehicles, motorcycles, parts and pieces and building material, sales increased 4.1% in February, driven by the 8.8% increase in vehicles, motorcycles, parts and pieces.

(Translated by LABS)

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