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Retail sales in May came in stronger than expected in Brazil.

Talk of the Day 



Retail sales in May came in stronger than expected, with a positive surprise in "Hyper, supermarkets" and once again in "Specialized food wholesale". Broad retail sales expanded 0.8% mom/sa in May (+5.0% yoy), above our call (-0.4% mom/sa) and the market's expectation (-0.5% mom/sa). Core sales rose 1.2% mom/sa (+8.1% yoy), also higher than our estimate (-0.4% mom/sa) and the market's expectation (-0.5% mom/sa). Compared with our estimates, the largest surprise was in "Wholesale specialized in foods" (-8.2% vs. our forecast of -16.2% yoy). The positive highlight was "Hypermarkets, supermarkets, food, beverages and tobacco " (+0.7% mom/sa), while "Auto & Parts" (-2.3% mom/sa) stood out on the negative side.


Activity remains strong. The floods in Rio Grande do Sul seem to have had a greater and more localized effect on industry and possibly on the region's service sector in May, while retail sales were less affected (possibly due to a stockpiling effect). In all, today's data signals that, so far, the tragedy in the south of the country has not affected the prospects for aggregate GDP growth in the year. **Full story here.


Tomorrow’s Agenda: May's service sector revenue data will be released. We estimate a 0.8% mom/sa decline (-0.3% yoy), with the component of services offered to households likely increasing 0.5% mom/sa (+3.0% yoy). Although with a small weight in the PMS headline, this component is particularly important to our GDP tracking.




The central bank of Mexico (Banxico) released the minutes of June's monetary policy meeting in which most board members voted for keeping the policy rate unchanged at 11.00%, amid heightened post-election volatility.  The minutes revealed that deputy governor Omar Mejía’s minority vote for a 25-bp cut, was based on his view that the economy was experiencing two inflationary shocks in opposite directions: currency depreciation versus weaker than expected activity. He added that the level of contractionary monetary policy should reflect the progress of the disinflationary process and greater slack conditions.


 The monetary policy minutes suggest that at least three board members are open for a rate cut in the next meeting (of which one already voted for a rate cut in June). Even one of the board members which had a hawkish tone in the minutes did not rule out fine-tuning adjustments in the policy rate. Overall, we think the minutes are consistent with our base scenario of the central bank cutting its policy rate by 25-bp in the August meeting. Certainly, bouts of volatility related to post-election uncertainty risk another pause. There are two more inflation prints before the August 8 monetary policy meeting. **Full story here.


Tomorrow’s Agenda: INEGI will publish May’s industrial production figures, which we expect to grow 0.8% (from 5.1% in April).




Macro Vision Public Finance: Revenue blues. Colombia’s fiscal accounts have been under additional scrutiny this year, mainly due to significant revenue underperformance, affecting the Treasury´s cash balances. In this report we discuss the ambitious fiscal consolidation path proposed by the administration and the government’s financing needs. **Full story  here.




Tomorrow’s Agenda: INDEC will publish the National CPI for June 2024. According to price-tracker Eco Go consulting, consumer prices increased 5.2% MoM in June, which would lead to a slight deceleration in annual inflation to 273.6% from 276.4% in May.