Brazil’s Retail Trade Grows 5.2 Percent in July, Nears 2014 Record

RIO DE JANEIRO, BRAZIL – In July, Brazilian retail trade maintained the vigor recorded over the previous two months, closing the month with a 5.2 percent sales increase, as reported on Thursday, September 10th, by IBGE (Brazilian Institute of Geography and Statistics). It was the highest growth for the month since the start of the survey, in 2000.

With the increase, the indicator offsets not only the losses caused by the pandemic, but is close to the historical record reached in October 2014, before the 2016 recession. “It’s a very atypical year,” commented survey manager Cristiano Santos.

The sales rebound occurs as restrictions on opening stores in the country are lifted. In July, there was an increase in virtually all activities surveyed. The exception was supermarkets, which were performing well even at the peak of the crisis.

Compared to the same month last year, commercial sales grew by 5.5 percent, the highest growth for the month since 2013.

“Until June, there was a kind of compensation for what occurred in the pandemic. In July, we have a growth surplus”, said Santos. In July, trade sales were 5.3 percent above the February figure, the last month with no isolation measures in place.

With this growth, sales are only 0.1 percent below the historical record, set in October 2014. “We are opening the second half of 2020 in a context of heated trade,” said the IBGE manager.

He considers that the reopening and the emergency aid contribute to this warm-up. The Federal aid may have favored supermarkets, building materials and furniture and appliances the most, he says. “This income increase is ultimately translated into consumption.”

However, Santos points out that there is unequal growth, as there are still sectors much below the pre-pandemic level. Despite the 25,2 percent growth in July, the sale of fabrics, clothes and shoes are 32,7 percent below February.

Office, computer and communications equipment recorded an 11.4 percent increase, but remain six percent below the pre-pandemic level. Fuels and lubricants and vehicles, motorcycles, parts and components have not recovered yet, remaining 9.6 and 19.7 percent below February, respectively.

The supermarket segment, which represents half of the indicator basket of commodities, remained stable in July and is 8.9 percent above the pre-pandemic level. The sector is targeted by the government due to escalating food prices, which led President Jair Bolsonaro to call for “patriotism” and reduce import tariffs.

The IBGE survey shows the impact of inflation on retail trade. Despite stable sales, supermarkets reported 0.5 percent higher revenues in July. The segment’s revenue from other articles for personal use also grew above sales: 12,1 percent against five percent, respectively.

For the third consecutive month, the survey shows lower impact of social isolation on trade. From the total companies surveyed, 8.1 percent reported an impact on its revenues in July, 4.1 percentage points below the June figure.

With the return of consumers, some segments are experiencing challenges to replenish their stocks, as shown by another IBGE survey released last week. Traders from several sectors report delivery delays by the industry, shortage of products and price increase.

Experts fear that the rebound pace will be affected by the reduction in the amount of the emergency aid paid by the government, which will be R$300 until the end of the year. On the other hand, the savings rate of the Brazilian economy is at its highest in five years, which can help drive the economy.

A study conducted by Itaú bank’s economic analysts shows that the rebound rate is higher in regions with fewer deaths, where more consumers feel it is safe to go shopping. In the second quarter, the most critical period of the pandemic, the country’s GDP (Gross Domestic Product) fell by 9.7 percent.

According to IBGE, retail trade grew in 21 of the 27 states in July, compared to the preceding month. Expanded retail trade, which includes vehicle and building materials sales, increased by 7.2 percent.

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