(Adds details on retail sales data, economic downturn)
By Brad Haynes
SAO PAULO, July 14 (Reuters) - Brazil's retail sales fell more than expected in May as faster inflation and a rising jobless rate appeared to deepen a likely recession in Latin America's largest economy.
Sales volumes dropped a seasonally adjusted 0.9 percent in May from April, the fourth consecutive monthly drop, the government statistics agency IBGE said on Tuesday.
Retail sales been expected to fall 0.3 percent, according to the median estimate of economists polled by Reuters, who have underestimated the extent of falling sales volumes for every month since February.
Layoffs have hit Brazil's labor market harder than many expected while inflation has climbed to nearly 9 percent, twice the official target despite a string of interest rate hikes by the central bank.
With purchasing power retreating, consumer confidence has tumbled to decade lows, sapping the household spending that kept Brazil out of recession in recent years.
Since the start of the year, economists have forecast 2015 will be the sharpest downturn in Brazil in 25 years. Weakening consumer demand has forced many of them to cut their GDP estimates for the year.
Retail sales fell 4.5 percent from May 2014, the worst drop from the year-ago period in nearly 12 years.
The IBGE data showed weak demand for groceries and home furnishings, with appliance sales falling nearly 18 percent from a year earlier and furniture sales plunging 20 percent.
Brazil's biggest retailer, GPA SA, reported weak second-quarter sales on Monday as revenue from its home furnishings division Via Varejo SA dropped 22 percent from a year earlier. (Additional reporting by Silvio Cascione in Brasilia; Editing by Paul Simao)