People walk in front of a store on a commercial street in downtown Sao Paulo December 4, 2014. REUTERS/Paulo Whitake

SAO PAULO (Reuters) -Retail sales volumes in Brazil rose 0.2% in August from July, data from government statistics agency IBGE showed on Wednesday.

The result was in line with analysts' expectations and broke a streak of four consecutive monthly declines, despite the backdrop of tight monetary policy.

Five out of eight sectors had positive readings in August, with office equipment and supplies, IT, and communications marking the biggest variation influenced by the strengthening of the Brazilian real against the U.S. dollar, IBGE said.

Pantheon Macroeconomics' chief Latin America economist Andres Abadia said the August figures reflected a mild recovery under pressure from high borrowing costs.

"Broad retail has shown occasional resilience, but overall activity has lost traction after modest earlier gains. We expect conditions to improve modestly in Q4 and early 2026," he said.

Policymakers at Latin America's largest economy kept the benchmark interest rate unchanged at 15% —its highest level in nearly two decades—during their latest meeting in September, signaling it would remain elevated for an extended period to bring inflation back to target.

On a year-over-year basis, sales grew 0.4% in August, marking the fifth straight annual increase and slightly beating the 0.3% gain expected by analysts in a Reuters poll.

(Reporting by Isabel Teles)