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Soft retail sales contrast with the frontloaded expansionary fiscal stance.
2024/03/21 | Julio Ruiz


Retail sales fell by 0.8% YoY in January, below both - our forecast of +1.1% and consensus of +1.2% (as per Bloomberg). The calendar adjusted quarterly annual rate of retail sales stood at 0.8% in January (from 2.0% in 4Q23). This is the second consecutive time that retail sales surprised to the downside (December stood at -0.2% YoY versus market consensus of 2.4%). In contrast, also using calendar adjusted figures, the real wage bill, the key determinant of private consumption, rose at a resilient quarterly annual rate of 8.9% YoY in January (from 9.3% in 4Q23), with formal employment at 3.1% (practically unchanged from 4Q23), while nominal wages increased 10.5% (from 10.7%). The real wage bill is also supported by lower inflation. Real consumption credit from commercial banks continues to expand at a strong pace although slowing at the margin (12.2% YoY quarter ended in January, from 12.8% in 4Q23), while remittances converted to pesos fell by 9.1% (explained by an appreciated currency). At the margin, retail sales fell by 0.6% MoM/SA in January, taking the qoq/saar to -2.6% (from -0.9% in 4Q23). 


Our take: Weak retail sales at the beginning of the year appear hard to square with the resilience of the labor market and the frontloaded expansionary fiscal stance, suggesting the January print might have been a one-off. Our GDP growth forecast for 2024 stands at 2.8%, also supported by a favorable external demand. Tomorrow we will have the monthly GDP for January (9:00 SPT) which will give us a better picture of activity.


See detailed data below