Brazil Retail Sales September 2007

Bloomberg this morning:

Brazil's retail sales rose more than expected in September, led by sales of cars, computers and home appliances, as record low interest rates stoke consumer demand in Latin America's biggest economy.

Retail, supermarket and grocery store sales, as measured by units sold, rose 8.5 percent in September from the year-ago month, the national statistics agency reported today. Economists expected an 8 percent gain, according to the median of 31 forecasts in a Bloomberg survey.

The report added to speculation that central bankers won't move to lower the benchmark lending rate anytime soon on concern that accelerating economic growth will fuel inflation, said Zeina Latiff, an economist with ABN Amro NB's Brazilian unit.

``The figure reinforces the central bank diagnosis about the need to pause,'' said Latiff, in a phone interview from Sao Paulo.

Against the backdrop of the fastest economic growth since 2004, the bank on Oct. 17 paused after 18 straight cuts, holding the overnight rate at an all-time low of 11.25 percent, down from 19.75 percent in September 2005

Higher food and gasoline prices last month helped quicken annual inflation last month to 4.12 percent compared with an eight-year low of 2.96 percent in March. The bank targets annual inflation of 4.5 percent.

Sales of computer, office materials and communication equipments jumped 30.4 percent in October from the year-ago month. Sales of home appliances climbed 12.7 percent. Sales of cars and construction materials rose 19.8 percent and 9.1 percent respectively.

``Higher sales are disseminating among all sectors,'' said Zeina, who doesn't expect policy makers to lower the so-called Selic rate again until 2009.

The Brazilian real rose for a second day in early trading, climbing 1.7 percent to 1.7355 per dollar at 9:16 a.m. New York time from 1.7660 late yesterday.

Yields on interest-rate futures fell. The yield on the inter-bank deposit contract for Jan. 2, 2010, delivery, the most traded interest-rate futures contract in Sao Paulo, fell 6.6 basis points, or 0.066 percentage point, to 11.940 percent.