worse than we had expected (at +5.5%, Patria’s forecast was fully in line with the market consensus). All items recorded positive growth, only motor-vehicle sales and maintenance remained flat. Data next month should reveal whether the slow sales growth in April is connected to the sharp increase in world oil prices or if it was simply temporal. The current and future projected prices of crude oil and gas are widely discussed now, which could discourage purchases related to motor vehicles. Nevertheless we tend to believe that April’s sluggish sales are a largely unrelated, temporal phenomenon.
Retail sales figures for 2000 to date, however, confirm the ongoing recovery in household demand. On the other hand, demand is under control and has not led to pressure on the trade balance and inflation. We should point out that growth in industrial nominal wages has substantially decelerated in 2000 (from 9.5% in February to 2.4% in April) and unemployment is set to increase in the coming months. Thus, we do not expect a further acceleration of domestic demand. We expect full-year 2000 retail sales to increase 3.5%. We believe that the data released today supports the central bank’s neural monetary policy bias.