Brazil's retail sales grew 1.3 percent in August compared with July, the Brazilian Institute of Geography and Statistics (IBGE) said on Thursday.

August retail sales had their best performance since June 2017 and offset most of the 1.5 percent drop registered in the past three months, according to IBGE.

In comparison to the same period of 2017, retail sales increased 4.1 percent year-on-year in August this year. In year to date sales ending in August, the sector registered a growth of 2.6 percent.

Seven of the eight commercial retail sectors increased sales in August. Among those at the top were textiles, clothing and footwear (5.6 percent) and fuels and lubricants (3 percent).

The only sector that saw negative numbers was books, newspapers and paper products which declined 2.5 percent.

Retail sales is one of the economic drivers of Brazil's economy and its sluggish performance prevents further expansion of the largest economy in Latin America.

Results of August indicate that the retail sector has nearly recovered from the contraction it previously suffered, according to the director of the IBGE studies, Isabella Nunes, "and returns to a level close to that of April."

However, she cautioned that the positive numbers should not be taken with too much optimism.

"It's not a tendency that will suddenly take sales off the path (of slow recovery). It's not a correction. August played the role of reversing the losses seen in the previous three months," Nunes said.

Retail sales fell 4.3 and 6.2 percent in 2015 and 2016, respectively, which had a huge impact on the contraction of Brazil's GDP.

In 2017, retail sales recovered and grew 2 percent, which helped Brazil's economy get out of the recession and grow 1 percent.