Retail sales in Brazil defied expectations of a rebound in April and fell for the third straight month as unemployment and inflation rose and consumer confidence languished near its lowest level in at least a decade. Retail sales volumes dropped 0.4 percent in April from March on a seasonally adjusted basis, official statistics agency IBGE said on Tuesday, far worse than the median forecast of a 0.6 percent increase in a Reuters poll of 28 economists.
Weaker household demand has compounded Brazil's sharp economic downturn this year. The slump has battered President Dilma Rousseff's approval ratings as her government raises interest rates and taxes to restore credibility with investors. Economists expect Brazil's economy to fall into its worst recession in 25 years, shrinking more than 1 percent this year.
April retail sales fell 3.5 percent from a year earlier, the worst decline since August 2003. Falling demand for furniture, appliances and office supplies in April from March offset stronger sales at supermarkets and drugstores, the only two of eight categories that showed higher volumes. Borrowing costs in Brazil are at a more than six-year high after a string of interest rate hikes by the central bank, which is fighting 12-month consumer inflation of 8.5 percent, the worst since 2003.
Brazil's jobless rate, which had defied a broader slowdown in recent years, has also jumped faster than many economists expected this year. Unemployment hit a four-year high in April as companies cut payrolls and investments to salvage profits. As a result, consumer confidence has barely recovered from March, when an index compiled by the Getulio Vargas Foundation hit its lowest level since the data series began in September 2005.
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