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Despite World Cup Brazil’s Retail Sales Fall Brisk 3%

Car accessories shop in BrazilRetail sales declined 3% month-on-month in April, in Brazil, with only two of the ten surveyed sales components recording gains, the statistical agency IBGE (Brazilian Institute of Geography and Statistics) said Wednesday. Economists were expecting sales to drop at a much slower rate of 1.6%.

The overall retail sales index that includes trade of vehicles, motorcycles, parts and components and construction materials, recorded 4.7% fall in volume terms from the previous month.

The biggest fall in sales was observed in vehicles and motorcycles, parts and accessories, for which the index was down 11.7% monthly. Office equipment, computer and communications recorded a 10.5% decline in sales. Among the total surveyed sectors, sales in household goods and clothing and footwear registered gains.

Year-on-year, sales increased 9.1%, while economists were looking for a 10.1% rise. An annual growth of 22.7% in furniture and home appliances made the biggest contribution to the overall index. The increase in sales in this particular component was largely associated with the soccer World Cup event, the agency said.

Official data has indicated that in April, Brazil’s unemployment rate stood at 7.3% and in the first three months of this year, the economy expanded for the second consecutive quarter as the gross domestic product rose 9% year-on-year.

Brazil’s central bank raised its benchmark interest rate for a second straight meeting on June 9 to contain inflation that may remain above the government’s 4.5% target through 2011.

Policy makers raised the Selic rate to 10.25% from 9.5% and are likely to increase borrowing costs to 11% in July, according to the central bank survey. On Thursday the bank will publish the minutes of its latest meeting.

Brazil’s economy grew 9% in the first quarter from a year earlier, the fastest annual rate since 1995 and behind only China among major emerging markets. The fast growth has raised fears that the economy may be overheating. Morgan Stanley increased its 2010 Brazil growth forecast to a “Chinese-like” 7.9% from a previous 6.8% estimate in its June 14 report.

“If slower growth in China and falling commodities prices do not cool the economy, the central bank will have to,” Morgan Stanley said.



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