* Sales volumes rose 0.3 pct in Nov from Oct, 8.4 pct yr/yr
* Central bank expected to hold interest rate at record low
* Auto, appliance sales swing on tax break expectations
By Brad Haynes
SAO PAULO, Jan 15 Brazilian retail sales growth
slowed in November from October as a heavier debt load weighed
on consumer demand for big-ticket purchases, slowing a fragile
economic recovery and reinforcing expectations that interest
rates will remain at record lows.
Retail sales volumes in Brazil rose 0.3 percent in November
from October, government statistics agency IBGE said
on Tuesday, slowing from 0.8 percent growth the month before in
line with expectations.
The data comes on the eve of a central bank decision, when
officials are expected to hold their benchmark interest rate at
an historic low, part of a raft of policies to shake off a slump
in Latin America's biggest economy.
Consumer demand has kept Brazil out of recession over the
past year, thanks to record-low unemployment, rising wages and
cheaper credit. But Brazilian families are spending more than
ever to keep current on their debts, pinching demand for durable
"The numbers confirm the slowdown, with a very modest fourth
quarter and growth below 1 percent in 2012. It was an awful
year," said Andre Perfeito, chief economist at Gradual
Investimentos in Sao Paulo.
"It should also reinforce the consensus that the central
bank will hold rates down for an extended period."
In November, the central bank held its policy rate at a
record-low 7.25 percent after 10 straight rate cuts since
Brazil's economy slowed sharply in late 2011.
Economists widely expect the bank to keep interest rates
unchanged on Wednesday as well, according to a Reuters poll,
with a median forecast of stable rates through the end of 2013.
Yields on interest rate futures contracts were
little changed on Tuesday, suggesting the central bank may not
raise interest rates until the middle of 2014.
"A LOT OF NOISE"
President Dilma Rousseff has accompanied Brazil's monetary
stimulus with dozens of tax breaks and credit incentives in a
piecemeal effort to encourage consumption and support local
As a result, sales in the targeted sectors such as the auto
and home appliance industries have often swung sharply from
month to month based on expected policies, without expanding
much faster over the course of the year, according to Perfeito.
Purchases of vehicles and auto parts, for example, sank 23
percent in September, rebounded 18 percent in October then
dropped 5 percent in November.
"It would seem the government's actions haven't really
generated faster growth of total sales as much as more
volatility and a lot of noise," Perfeito said.
November's retail sales rose 8.4 percent from the
year-earlier period, the IBGE added, close to the
8.3 percent median estimate in the Reuters poll.
Slowing retail sales growth probably dragged on economic
activity in November, leading to a meager 0.1 percent expansion
of the central bank's IBC-Br economic activity index
after 0.4 percent growth in October, according to preliminary
forecasts from 15 analysts.
The government has repeatedly said that the last quarter of
2012 would mark the start of an economic rebound from the sharp
slowdown in the first nine months of the year.
Economists have slashed their forecasts for economic growth
in 2012 and 2013 after a disappointing third quarter. Brazil,
Latin American's biggest economy, is expected to grow 3.2
percent this year, up from a forecast of 1 percent last year.