Aid Brazil 2022: why ‘turbined’ benefit animates retail on Father’s Day, but not for the medium term

In a country where thousands of families are made up of single, separated or widowed mothers and their children, Father’s Day has always been less glittery for retail than Mother’s Day and Christmas, for example.

This year, however, the expectation is different, mainly due to the injection of resources expected in the economy with the Auxílio Brasil of R$ 600, which starts to be paid this Tuesday (9/8).

According to the Ministry of Citizenship, 20.2 million families should receive the benefit, with the inclusion of 2.2 million families from July to August. In August alone, disbursements with the Aid should total R$ 12.1 billion, according to the folder.

In this scenario, the CNC (National Confederation of Commerce in Goods, Services and Tourism) calculates that Father’s Day should generate R$ 7.28 billion in retail sales, a growth of 5.3% compared to 2021.

The increase should surpass that of Mother’s Day (3.9%) and Easter (2.2%) sales — the performance of Valentine’s Day will only be known on Wednesday (10/8), when the IBGE ( Brazilian Institute of Geography and Statistics) publishes the Monthly Trade Survey for June.

“It must be the best date (in sales growth) for retail in 2022”, predicts Fabio Bentes, economist at CNC.

According to him, the best retail dates in general are, in order: Christmas, Mother’s Day, Children’s Day, Father’s Day, Black Friday, Easter and Valentine’s Day.

“A series of incentives for consumption were introduced: FGTS was released, the INSS was advanced and now the Auxílio Brasil boosted. This will play in favor of sales, together with another factor, which is the reduction of inflation, due to the exemption of fuels”, says Bentes.

“No one gives a gallon of gasoline to the father, but if one of the main items of inflation, which is gasoline, is much cheaper as of July, this unfixes the family budget. It is an additional factor that was not foreseen two years ago. or three months”, he adds.

In retail in general, in addition to Father’s Day, CNC estimates that Auxílio Brasil and other benefits such as Vale-Gás and aid for truck drivers and taxi drivers will inject BRL 16.3 billion into sales by the end of 2022 — this is because part of the total R$ 34 billion foreseen in benefits should go to the service and debt payment sector, for example.

In retail, the hypermarkets and supermarkets (R$ 5.53 billion), fuels and lubricants (R$ 3.03 billion) and fabric, apparel and footwear (R$ 2.32 billion) should be the main beneficiaries.

‘The other side of the coin’

Bentes warns, however, that the gain that retail will have in the short term may be canceled out in the medium term, if interest rates remain at the very high current level (13.75%) for longer, to contain the inflationary pressure resulting from this injection. of resources.

“In a scenario of fiscal expansion as we are witnessing, the chance of interest to remain at the ceiling for a longer time increases. If the rate stays at 13.75% for nine to ten months, the benefits may be canceled out in the medium term”, says Bentes, explaining that high interest rates make the supply of credit more expensive and slow down the performance of the economy.

The “stimulus bomb” should also keep inflation under pressure for longer.

“We will have to live with high inflation. We have a relief in July (because of the drop in fuels), but most likely this trend will not continue from August onwards”, says the economist.

In the baskets of products most consumed on Father’s Day, for example, the price increase is expected to be 8.6% this year, compared to 2021, with clothes (21.9%), shoes (18.2) and drinks alcoholic beverages (17%) among the items with the most expressive price increases, according to CNC.

With inflation, Black Friday should again be affected this year. This is because the great attraction of the date is the discounts, but the cost inflation tends to make it difficult to reduce prices by retail.

This text was originally published here.