July 15 (Bloomberg) -- Brazilian retail sales rose for a sixth month in May as declining rates on consumer loans buoyed sales of cameras, computers and other goods for retailers such as Pinault-Printemps-Redoute SA.

Retail, supermarket and grocery store sales, as measured by units sold, rose 10 percent from the year-earlier period after rising 9.9 percent in April and 11.4 percent in March, the government said. Electronic goods and furniture led the sales growth.

``Brazil's growth prospects are good,'' said Pierre Courty, chief executive of Pinault-Printemps-Redoute's Fnac unit in Brazil. Europe's largest non-food retailer, owned by the family of French billionaire Francois Pinault, opened its sixth Fnac department store in Brazil this month after its same-store sales of electronic goods rose 15 percent in the first half.

The retail sales report adds to evidence that the recovery in South America's biggest economy is quickening after central bankers cut the benchmark lending rate by 10.5 percentage points in 11 months, leaving it at a three-year low of 16 percent, said John Bowler, an economist with the Economist Intelligence Unit.

``This growth bears out our view of the economy, which is pretty much getting back into gear,'' Bowler said in a telephone interview from London. ``We are seeing the economy expand pretty fast.''

Last month, Bowler boosted his 2004 economic growth forecast for Brazil to 4 percent from 3 percent. The government predicts growth of 3.5 percent for this year, reversing last year's contraction of 0.2 percent.

Stocks, Bonds

Brazilian stocks, bonds and the currency all gained after the report. The benchmark Bovespa stock index surged 1.8 percent while the currency advanced 0.3 percent to 3.02 reais to the dollar. The government's bond due 2040, one of Brazil's two benchmark securities, rose 0.5 cent to 96.5 cents on the dollar, according to J.P. Morgan Chase & Co.

The central bank rate reductions helped push the average interest rate on consumer loans down to 62.4 percent, the lowest in at least nine years, in May from 63.3 percent in April.

``If it weren't for lower interest rates, retail sales wouldn't be growing like this,'' said Valdemir Colleoni, managing director of Lojas Cem SA, a Salto, Brazil-based chain of electronic goods stores. In the first half of the year, Lojas Cem's customers financed 90 percent of their purchases through loans set up by the store, Colleoni said.

Sales of consumer electronics, household appliance and furniture surged 35.6 percent in May from a year earlier, the government said. Textiles, clothing and footwear sales grew 22.5 percent. Vehicle sales rose 21.4 percent, while supermarket, grocery store, food and drink sales rose 5.2 percent.

To contact the reporter on this story: Carlos Caminada at ccaminada1@bloomberg.net

Last Updated: July 15, 2004 17:01 EDT