Inflation makes retail sales fall more than expected, says IBGE

In yet another sign of difficulties in the economy, the volume of Brazilian retail sales fell again in September, down 1.3% compared to August, reported this Thursday (11) the IBGE (Brazilian Institute of Geography and Statistic).

It is the second consecutive decline in trade and the largest for the ninth month of the year in the historical series. The series started in 2000.

The negative result comes in a context of escalating inflation, which raises companies’ operating costs and reduces the population’s purchasing power.

Commerce was also in the red compared to September 2020. In this type of comparison, the drop was 5.5%, calculates the IBGE.

Analysts projected less intense casualties. According to a survey by the Reuters agency, expectations were for 0.6% setbacks in the monthly comparison and 4.25% over a year earlier.

Cristiano Santos, manager of the IBGE survey, stated that high inflation is the most important phenomenon to explain the fall in retail in September.

The sector’s performance is still affected by restrictions on access to credit and the weakened income of workers, recalled the technician.

“At the margin, the main phenomenon is inflation,” said Santos.

With the result of September, trade returned to below pre-pandemic levels. Now, it is at a level 0.4% lower than in February 2020. In August 2021, the sector was 0.9% above the pre-crisis level.

Among the eight activities surveyed by the IBGE, six had negative rates in September.

The most intense falls were in office, computer and communication equipment and material (-3.6%), furniture and household appliances (-3.5%) and fuels and lubricants (-2.6%).

According to the IBGE, the segment with the greatest weight in the formation of the September rate was hypermarkets, supermarkets, food products, beverages and tobacco. The branch fell 1.5%.

Two activities, on the other hand, showed stability or slight progress. They are as follows: books, newspapers, magazines and stationery (0%) and pharmaceutical, medical, orthopedic, perfumery and cosmetic articles (0.1%).

In 12 months, Brazil registers double-digit inflation. Until October, the most recent data, the IPCA (Broad National Consumer Price Index) accumulated high of 10.67%. It is the largest since January 2016 (10.71%).

According to Santos, the rise in inflation is more strongly perceived in trade activities such as fuels and lubricants and hypermarkets, supermarkets and food products.

In recent months, the advance of oil and the dollar has put pressure on items such as gasoline and diesel in Brazil.

In the case of food, there is also the effect of the higher US currency, in addition to the impact of the appreciation of commodities in the agricultural market and the losses in crops generated by the adverse weather.

Even with the performance of September, retail still accumulates a high of 3.8% in the year 2021. In 12 months, the advance is 3.9%.

The trade data series has been marked by strong revisions throughout the pandemic. It was no different this time. In addition to disclosing the September result, the IBGE updated previous numbers.

The fall in August, for example, was greater with the revision, going from 3.1% to 4.3%.

According to the institute, the Covid-19 crisis brought a lot of volatility to statistics and, therefore, provokes constant and wide-ranging revisions.

“The disarrangement of the production chains influences eventual revisions in the seasonal data”, pointed out Santos.

After the release of the numbers for September, the CNC (National Confederation of Commerce of Goods, Services and Tourism) cut from 4.6% to 3.6% the projection of high in retail sales in 2021.

In a report, the organization also highlighted that the sector is affected by rising prices.

“Right now, high and resilient inflation represents the main obstacle to the sustainability of the trade recovery. The sources of pressure are diversified and contaminate an increasing amount of prices,” the entity said.

CNC also highlights the negative impact of restrictions on household budgets. This comes at a time when the sector could be in a more comfortable situation due to the drop in isolation measures imposed by the pandemic.

“The budget restrictions of the population, associated with the near exhaustion of the indebtedness capacity of individuals, should make the flow of consumers in retail contribute less and less to the advance of sales in the coming months.”

In the entity’s view, the scenario for 2022 is challenging due to factors such as cost pressure.

The IBGE also informed this Thursday that the expanded retail trade —includes vehicles, motorcycles and parts and construction material— had a 1.1% drop in sales in September, compared to August. Vehicles dropped 1.7%, while construction materials dropped 1.1%.

To try to contain inflation, the Copom (Committee of Monetary Policy of the Central Bank) has been raising the basic interest rate, the Selic.

Higher interest rates, on the other hand, hinder household consumption and business investments. In other words, they represent an additional challenge for the resumption of economic activities. Retail is one of them.

with Reuters