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Analysts at Rabobank note that Brazil’s headline retail sales (i.e. “varejo ampliado”) fell 1.7% m/m (+1.8% y/y) in December, disappointing the consensus (-0.7%; 4.0%) and Rabobank’s own estimate (+1.6%; 7.4%).

Key Quotes

“The result seems to have been influenced by a payback to strong Black Friday sales in November – an effect that our models (clearly) failed to capture.”

“Despite the influence from recent shocks (e.g. truckers’ strike in May; one-off transfers in Q3), the trends point to continued expansion in goods consumption. In Q4, the broad retail sales index rose at a sequential annualized speed of 1.3% (Q3: 7.6%); in 18H2, broad sales moved at a sequential annualized pace of 4.5% (18H1: 4.2%).”

“The much lower than expected retail sales performance prompted us to revise down our projections for December IBC-Br index (out on Friday). We now look for a stable year-on-year print (previous: +0.9%), and a sequential decline of 0.1% m/m (previous: +0.3%).”