October 15, 2014 / 12:55 PM / 6 years ago

UPDATE 1-Brazil retail sales recover more than expected in August

(Adds details of retail sales data)

RIO DE JANEIRO, Oct 15 (Reuters) - Retail sales in Brazil rose more than expected in August, rebounding from a sharp July drop as demand increased for fuel, pharmaceuticals and clothing despite the weakest consumer confidence in more than five years.

Sales volumes grew a seasonally adjusted 1.1 percent in August from July, government statistics agency IBGE said on Wednesday. Sales had been expected to rise 0.75 percent, according to the median estimate of 28 economists polled by Reuters.

The recovery followed a 1.0 percent contraction in July and a 0.7 percent drop in June, as tighter credit, the disruptions of the World Cup and concerns about the job market led to one of Brazil’s weakest quarters for retail in the past decade.

Brazil’s sluggish economy has complicated President Dilma Rousseff’s campaign for re-election, which has gone to a runoff vote that is now too close to call. Economists say political uncertainty may also be weighing on consumer sentiment, which could drag on retail sales data for months to come.

A consumer confidence index measured by think tank FGV fell in August to its lowest level since April 2009.

Sales rebounded in the month across several retail segments, but did not lift food and drink sales, which have suffered from stubborn inflation and receded 0.1 percent in August.

One strong month was not enough to offset recent weakness on an annual basis. August’s sales fell 1.1 percent from the year-earlier period, the IBGE added, in line with market forecasts. (Reporting by Rodrigo Viga Gaier and Felipe Pontes; Writing by Silvio Cascione and Brad Haynes; Editing by Chizu Nomiyama)

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