Brazil's retail sales for December 2025 surged by 1.00% MoM, according to the latest release from the Sigmanomics database. This figure notably outpaced the consensus estimate of 0.50% and doubled November's 0.50% gain. The December reading also marks the strongest monthly increase since May 2025's 0.80% rise, reversing a string of subdued or negative months in the second half of 2025.

Drivers this month

• Robust holiday season spending boosted consumer goods and apparel sales.
• Improved real wage growth amid easing inflation supported discretionary purchases.
• Government stimulus measures and tax relief programs enhanced household liquidity.

Policy pulse

The Central Bank of Brazil has maintained its Selic rate at 13.75% since October 2025, balancing inflation control with growth support. The retail sales rebound aligns with the central bank’s inflation target band of 3.50% ±1.50%, as headline inflation eased to 4.10% YoY in December. This moderation has helped restore consumer purchasing power.

Market lens

Immediate reaction: The BRL strengthened 0.30% against the USD within the first hour of the release, reflecting improved sentiment. The benchmark IBOVESPA index rose 0.50%, while 2-year government bond yields tightened by 5 basis points, signaling confidence in near-term growth prospects.

Retail sales are a critical gauge of domestic demand and consumer health in Brazil. The 1.00% MoM increase in December 2025 compares favorably to prior months: November’s 0.50%, October’s 0.20%, and a negative 0.30% in September. Over the past 12 months, retail sales averaged a modest 0.10% monthly gain, underscoring December’s strength as a potential inflection point.

Monetary policy & financial conditions

The Central Bank’s steady policy stance has helped stabilize inflation expectations. Real interest rates remain positive but have eased from mid-2025 peaks, supporting credit growth. Consumer credit expanded 1.20% MoM in December, facilitating retail purchases. However, tighter lending standards in rural and lower-income segments persist.

Fiscal policy & government budget

Fiscal discipline remains a challenge. Brazil’s 2025 fiscal deficit narrowed slightly to 3.10% of GDP, but public debt stands near 80% of GDP. December’s retail sales boost partly reflects targeted government transfers and tax incentives aimed at low- and middle-income households. These measures are expected to continue into early 2026 but face sustainability questions.

External shocks & geopolitical risks

Global commodity prices stabilized in late 2025, benefiting Brazil’s export revenues and currency. However, geopolitical tensions in key trade partners and supply chain disruptions remain downside risks. The BRL’s recent resilience partly reflects improved terms of trade and investor confidence in Brazil’s macro framework.

What This Chart Tells Us

Market lens

Immediate reaction: The IBOVESPA index climbed 0.50%, reflecting optimism about domestic demand. The BRL/USD pair strengthened 0.30%, while 2-year government bond yields tightened by 5 basis points, indicating improved growth expectations and reduced risk premia.

Looking ahead, Brazil’s retail sales trajectory faces several scenarios:

Bullish scenario (30% probability)

• Continued easing of inflation supports real income growth.
• Fiscal stimulus and credit expansion boost consumer spending.
• Global commodity prices remain stable or rise, strengthening the BRL and domestic demand.

Base scenario (50% probability)

• Retail sales grow moderately at 0.50% MoM in early 2026.
• Monetary policy remains steady, balancing inflation and growth.
• Fiscal measures provide limited but targeted support.

Bearish scenario (20% probability)

• Inflationary pressures resurge, eroding purchasing power.
• Fiscal tightening or political uncertainty dampens consumer confidence.
• External shocks disrupt trade and financial markets.

Overall, the December 2025 retail sales data from the Sigmanomics database suggests a cautiously optimistic start to 2026. Policymakers and investors should monitor inflation trends, fiscal developments, and external risks closely.

Brazil’s retail sales rebound in December 2025 signals a potential turning point for domestic demand after a challenging year. The 1.00% MoM gain exceeded expectations and reversed recent softness, reflecting improved consumer sentiment and supportive macro conditions. While risks remain from fiscal constraints and global uncertainties, the data provides a constructive backdrop for economic growth in early 2026.

Investors should watch for sustained retail momentum as a bellwether for Brazil’s broader recovery. Monetary policy appears well-calibrated to maintain inflation within target, while fiscal policy will need to balance stimulus with sustainability. External factors, including commodity prices and geopolitical risks, will continue to influence the outlook.