IBGE: Retail sales break record in February in Brazil – 04/11/2024 – Market

The volume of retail sales continued to rise in Brazil, registering growth of 1% in February, compared to January, according to data released this Thursday (11) by IBGE (Brazilian Institute of Geography and Statistics).

With the result, the sector renewed the record of a historical series started in 2000. The previous maximum had been reached in October 2020, according to IBGE.

The 1% increase came well above the projections of financial market analysts. The expectation was for a drop of 1%, according to a survey by Reuters.

The record occurred despite the loss of momentum compared to January, when sales volume rose 2.8%. The sector had last recorded at least two consecutive months of growth in 2022, according to IBGE criteria.

At the time, there was a sequence of three advances in August (0.5%), September (0.7%) and October (0.6%). Last year, the sector even registered two positive rates in a row in March (1.1%) and April (0.1%), but the second is considered close to stability.

Analysts point out that retail trade tends to benefit in 2024 from factors such as a heated job market, a truce in inflation and a reduction in the basic interest rate (Selic), which is still at a double-digit level (10.75% per year) .

According to IBGE, six of the eight activities investigated in the survey advanced in February. The highlights were pharmaceutical, medical, orthopedic and perfumery articles (9.9%) and other articles for personal and domestic use (4.8%). The duo exerted the main influences on the total result.

On the other hand, there were negative rates in 2 of the 8 groups of activities: fuels and lubricants (-2.7%) and hypermarkets, supermarkets, food products, beverages and tobacco (-0.2%).

“There has been a change in the focus of consumption in recent months, moving from a more restricted budget scenario, concentrated on basic products, to a moment with more space for the consumption of other types of products”, stated Cristiano Santos, manager from IBGE research.

“Such a scenario is related to the increase in credit, due to the reduction in the basic interest rate, as well as growth in real income and the employed population”, he added.

Economist Rafael Perez, from Suno Research, also highlights this change in family consumption patterns. In 2023, Brazilians focused on purchasing basic products due to falling food prices, according to Perez.

In 2024, the data reflects factors such as an increase in family income, an improvement in credit and a drop in default rates, assesses the economist.

“The retail segment will continue to be driven by the more favorable domestic scenario for consumption, given the heated job market and the cycle of Selic cuts”, he says.

“This context of stronger economic activity at the beginning of the year corroborates our scenario of a stronger increase in GDP in the first quarter”, he adds.

Compared to February 2023, retail trade rose 8.2%, the ninth consecutive increase, said the IBGE. The accumulated result for 2024 is an increase of 6.1%, while the accumulated result for the last 12 months registered growth of 2.3%.

In expanded retail trade, which includes vehicles, motorcycles, parts and pieces and construction material, sales volume increased by 1.2% in February, compared to January. The expanded sector is still 0.8% below the series record, seen in August 2012.

“Looking ahead, to 2024, our perspective is that a heated job market, the minimum wage appreciation rule and well-controlled inflation should offset a still high real interest rate. We project an increase of 1.4% for expanded retail this year. year”, said economist Igor Cadilhac, from PicPay.

According to economist Claudia Moreno, from C6 Bank, the data released so far suggests economic activity that is stronger than expectations.

She says that there is an upward bias for the GDP growth projection in 2024 — for now, the bank predicts an increase of 2.4%.

“In our view, the growth scenario above what we consider to be the potential of the Brazilian economy makes it difficult for the continued slowdown in inflation. For this reason, there is a chance that the monetary authority [Banco Central] not reach a terminal interest rate of 9.25%, which is our current projection for the 2024 Selic”, ponders Moreno.