March 24, 2020 / 12:49 PM / 14 days ago

UPDATE 1-Weak Brazilian retail sales show consumers cautious even before coronavirus

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By Jamie McGeever

BRASILIA, March 24 (Reuters) - The Brazilian consumer kicked off the year on a soft footing, official figures on Tuesday showed, as retail sales fell at the fastest rate in over a year in January, well before the anticipated hit to spending from the coronavirus pandemic.

Sales fell 1.0% in January, government statistics agency IBGE said, weaker than the median forecast in a Reuters poll of economists for a 0.6% decline and the steepest monthly fall since December 2018.

December’s figures were revised down sharply too, with retail sales now shown to have fallen 0.5% on the month compared with the initial estimate of a 0.1% decline, IBGE said.

On a year-on-year basis, sales rose 1.3% from January 2019, less than the 3.5% predicted in the Reuters poll, while over the course of 2019, sales rose 1.8% from 2018, IBGE said.

Latin America’s largest economy was expected to grow more than 2% this year, the fastest rate since 2013, according to consensus estimates in January. The consumer was supposed to be a key driver of that growth.

Recession and outright contraction this year are now the most likely scenario thanks to the coronavirus fallout, according to a growing number of economists. But Tuesday’s retail sales figures show consumers were already cautious.

IBGE analyst Cristiano Santos said the 1.3% annual growth rate showed momentum is losing steam.

“It is growth, but it’s slowing every year. (Sales) remain 5.4% below the record level reached in October 2014,” he said.

Santos declined to speculate on how the coronavirus will affect sales in the coming months. But with businesses being shuttered across the country and people staying indoors, economists say it is inevitable they will be hit hard. (Reporting by Jamie McGeever; Editing by Andrew Heavens and Steve Orlofsky)

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