Retail sales in Brazil begins year with record high in January

SAO PAULO (Reuters) - Brazil's retail sector started 2023 stronger than expected and with record high sales in January, although the outlook is that the tight credit scenario and weak economy amid high interest rates will weigh on the sector going forward.

Brazil's retail sales rose 3.8% in January compared with the previous month, the strongest performance for the month since the series started in 2000, government statistics agency IBGE said on Wednesday.

The growth was 2.6% from the same month a year earlier, it added.

This happened despite the bankruptcy protection request in the month by Americanas, one of the largest retail chains in the country.

A Reuters poll of economists showed that expectations were for an increase of 3.2% on a monthly basis and 1.4% year on year.

"It's an important result, because retail sales had been showing negative results," said Cristiano Santos, director of the poll, who highlighted a weak comparison base - in the last two months of last year, sales accumulated a loss of 3.5%.

The data backs up industry executives' comments in mid-March.

Magazine Luiza's president, Frederico Trajano, said on March 10 that the company's January sales performance "was above expectations."

Among the eight activities surveyed, seven showed increased sales in the first month of the year.

"We had a bad Black Friday and Christmas, and in early 2023 there was a wave of promotions and sales. Those summer promotions boosted sales," Santos said.

The highlights in January were growth of 27.9% in the fabrics, clothing and footwear sector; and 2.3% in supermarkets, food products, beverages and tobacco.

(Reporting by Steven Grattan and Camila Moreira; Editing by Bernadette Baum)