Brazilian retail sales fell 0.8% in July compared to the previous month, according to the Brazilian Institute of Geography and Statistics (IBGE). The decline was influenced by expensive credit, high household debt, and a slight drop in income during that period.
The worst-performing segment was furniture and appliances, which retreated 4.9% in July. This sector tends to heavily depend on financing, which explains its sensitivity to credit conditions. The second largest decline was recorded in books, newspapers, and stationery, with a contraction of 4.2%, followed by fabrics, clothing, and footwear, which fell 2.7%.
On the positive side, fuels and lubricants were the only segment to show growth, with an increase of 0.3%. The result reflects the challenging scenario for consumption, even with the expectation of a new cut in the Selic rate.
The benchmark interest rate is currently at 14% per year and is expected to fall to 13.75% on Wednesday, according to market expectations. Despite the reduction, interest rates should remain at elevated levels, which tends to continue reducing consumer appetite in the coming weeks.
