Retail sales pull out of the doldrums in January

Retail categories that spent most of last year in the doldrums saw their sales pick up in January. Data from the Brazilian Institute of Geography and Statistics (IBGE) showed a 2.5 percent monthly increase in sales in the sector, after a 1.4 percent decline in December. 

This is also the first monthly uptick in the data since September 2023, putting retail 5.7 percent above the pre-pandemic operating level (February 2020), but still slightly below (0.8 percent) the peak of the historical series reached in October 2020 — which says a lot about the state of retail in the country and the sector’s difficulty in achieving consistent growth.

January’s sales increase was driven by categories such as fabrics, apparel, and footwear (8.5 percent), computer and communications office equipment and supplies (6.1 percent), furniture and household appliances (3.6 percent), and personal items (5.2 percent) — all categories that had shown mixed results in previous months. 

End-of-year sales combined with a resilient job market may have contributed to this recovery, albeit temporarily, as family debt and delinquency rates remain high, closing 2023 at 77.8 percent and 29.5 percent, respectively. 

Another category that influenced the January result due to its greater weight (55.5 percent) in the overall index was supermarkets, food, beverages, and tobacco. Sales in this segment rose 0.9 percent in January and 4 percent over 12 months. According to the IBGE’s research coordinator, Cristiano Santos, the food segment has grown for 18 consecutive months. 

Despite the recent rise in food prices, the growth in the population’s purchasing power combined with the deflationary process is having a direct impact on the category. When families have extra money, they spend it in grocery stores. Supermarket sales in January were “well above” pre-pandemic levels, up 9.9 percent on February 2020.

In so-called “expanded retail,” sales of cars, motorcycles and parts were up 2.8 percent from December and 11.9 percent from January 2023. 

Another expanded retail segment that grew was food and beverage wholesale, with sales up 16.1 percent from a year ago, an upward trend linked to Brazil’s atacarejo phenomenon.

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