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CORRECTED-UPDATE 2-Brazil retail sales grow for 5th straight month in Oct
December 13, 2012 / 11:31 AM / 5 years ago

CORRECTED-UPDATE 2-Brazil retail sales grow for 5th straight month in Oct

(Corrects fourth paragraph to reflect growth of five
categories, not six)
    * Sales volumes expand 0.8 pct from Sept, near forecasts
    * Home appliances sales up 1.4 pct from Sept, driving growth
    * 9 pct growth yr/yr reinforces role of consumer demand

    By Brad Haynes and Silvio Cascione
    SAO PAULO, Dec 13 (Reuters) - Retail sales volumes rose for
the fifth straight month in October, government data showed on
Thursday, as consumer demand continued to support a still
fragile economic recovery.
    Sales volumes rose 0.8 percent in October from September
, according to statistics agency IBGE, close to the
0.9 percent growth forecast in a Reuters poll. 
    Aggressive interest rate cuts and tax breaks have kept
Brazilian families spending even as investment retreats in the
face of weak global growth and rising local production costs.
    Temporary tax incentives spurred 1.4 sales growth for home
appliances, driving retail growth in October while the larger
supermarket segment grew a more modest 0.4 percent. Five of
eight categories in the retail sales index expanded in October.
    "You still need to be cautious. We've had short-term
stimulus, but I don't see a sustained trajectory for sales
growth that could benefit industrial production," said Mauricio
Nakahodo, an economist at Banco Tokyo-Mitsubishi in Sao Paulo.
    Brazil's economy, until recently a star performer among
emerging markets, is now expected to grow around 1 percent this
year, leading some economists to criticize the two-speed growth
that has stoked demand while industry languished.
    A weaker exchange rate and record-low interest rates have
helped industrial production recover in recent months, but a
declining investment rate highlights ongoing uncertainty about a
recovery that policymakers had promised throughout 2012.
    Still, retailers' solid performance reinforce the perception
of a gradual economic recovery in Brazil and highlight the
bouyant consumer confidence that has held up even as families
have shouldered record debt loads.
    "Consumer debts and loan delinquencies remain high, and that
indebtedness will limit further sales expansion," said Nakahodo.
    Vehicle sales, which plunged earlier in the year after a
spike in car loan defaults, jumped sharply in October, driving
growth of a broader retail index, as consumers expected a key
tax break to expire.
    President Dilma Rousseff later extended the auto tax
incentives through the end of the year, but analysts warn of a
sharp contraction in the auto industry when the tax breaks do
eventually expire.
    October's retail sales jumped 9.1 percent from the
year-earlier period, the IBGE added, close to the
9.0 percent median estimate in the Reuters poll. Forecasts
ranged from 5.0 percent to 11.4 percent growth.
    For details of the IBGE report: here

 (Reporting by Silvio Cascione and Brad Haynes; Editing by W

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