October 11, 2017 / 1:32 PM / in a year

UPDATE 1-Brazil retail sales unexpectedly fall in August

SAO PAULO, Oct 11 (Reuters) - Brazilian retail sales unexpectedly declined in August for the first time in four months, underscoring an uneven recovery for consumers in Latin America’s largest economy.

Sales volumes excluding cars and building materials slipped 0.5 percent in August from the month before after seasonal adjustments, government statistics agency IBGE said on Wednesday, bucking the median forecast of a 0.2 percent increase in a Reuters poll.

That marked the second straight month of weaker-than-expected retail figures, dampening optimism over a recent pickup in consumer spending following three months of growth.

Seven of the eight product categories tracked by IBGE declined in the month, with only the furniture and home appliances category in the black.

Still, IBGE economist Isabella Nunes said the outlook for a gradual economic recovery remains intact, with full-year figures likely to show stability from 2016.

Lower interest rates fueled household spending and slowing inflation bolstered consumers’ purchasing power this year. This helped lift second-quarter economic growth above analyst expectations, though investment is yet to rebound from Brazil’s deepest recession in a century.

Most economists expect that trend to continue as the central bank cuts rates to record lows and newfound strength in the labor market fails to translate into higher inflation.

“Despite the weaker than expected August print, the outlook for private consumption and retail sales has been improving,” Goldman Sachs economist Alberto Ramos wrote in a report.

Retail sales rose 3.6 percent in August from a year earlier, compared to expectations of 4.5 percent growth. (Reporting by Bruno Federowski; Editing by Meredith Mazzilli)

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