RIO DE JANEIRO – The volume of retail sales in Brazil fell 3.1 percent in February compared with the same month in 2014, the largest interannual decline in nearly 12 years, the Brazilian Institute for Geography and Statistics, or IBGE, said Tuesday.
In August 2003, retail sales plunged 5.7 percent from year-earlier levels, the IBGE said.
IBGE experts attributed the sharp drop in sales to inflation, running at 8.3 percent over the past 12 months, higher interest rates and declining incomes.
“Retail sales reflect family consumption,” IBGE economist Juliana Vasconcellos said. “Consumers are affected by income, prices and credit. Incomes have decreased 1.5 percent over the past 12 months and credit has fallen too.”
Consumer spending, long the main engine of growth, has slowed in recent months, leading to stagnation in Latin America’s biggest economy.
After rising 0.8 percent from December to January, store sales dipped 0.1 percent between the first and second months of this year.
The retail figures come amid a stream of negative economic indicators.
President Dilma Rousseff’s government recently reported that the economy grew 0.1 percent in 2014, while private sector economists predict a contraction of around 1 percent this year.
The government has launched an austerity plan that cuts spending and eliminates tax breaks in a bid to address the difficult combination of an economic slowdown, inflation at a 10-year high, the depreciation of the real and a substantial budget deficit.