UPDATE 2-Brazil retail sales post sharpest drop on record in December

miércoles 11 de febrero de 2015 08:39 GYT
 

(Adds comment, data breakdown)

RIO DE JANEIRO Feb 11 (Reuters) - Retail sales in Brazil declined at the sharpest pace on record in December, capping their weakest year since 2003, brought lower by a disappointing Christmas shopping season.

Retail sales, excluding automobiles and building materials, plunged 2.6 percent from November, undershooting all 24 estimates in a Reuters poll, government statistics agency IBGE said on Wednesday, citing seasonally adjusted data.

That was the steepest monthly fall in retail sales since the beginning of the IBGE data series in 2000.

In the full year of 2014, retail sales grew 2.2 percent over the previous year, the slowest rate in 11 years and far below the average 7.5 percent growth rate of the previous 4 years.

Weak consumption is one of the clearest signs of the malaise hanging over Brazil's economy. Consumer confidence has fallen to the lowest levels since at least 2005, while wage growth has lost steam as new job creation sputters.

The sharp slowdown in retail sales was a key reason for Brazil's stagnant growth last year. Economists warn activity will probably worsen in 2015 after a string of tax and interest rate hikes weigh further on consumption.

"The outlook for the next few months remains bleak," wrote economists with local consultancy MCM in a research note.

Consumer goods companies from cosmetics maker Natura SA to apparel chain Cia Hering are expected to post weak fourth-quarter earnings. Retailers have struggled to pass along costs to customers, impacting operating profit margins almost across the board.   Continuación...