By Igor Sodre

SAO PAULO, Oct 20 (Reuters) - Sales in Brazilian bars and restaurants dropped 4.9% in September compared to August amid growing cases of methanol contamination in alcoholic beverages, data released by payment company Stone STNE.O and the Brazilian Association of Bars and Restaurants Abrasel showed on Monday.

WHY IT'S IMPORTANT

Brazil recorded 133 reports of methanol poisoning linked to alcoholic beverages since September, including 46 confirmed cases and eight deaths, according to the Brazilian Health Ministry.

The contamination has sparked consumer fears, adding pressure to a sector already facing inflation and weak job creation.

CONTEXT

Brazil's consumer prices rose 0.48% in September, reversing a 0.11% decline in August, according to official data. Meanwhile, formal job creation fell short of economists' projections in August.

These factors, along with the methanol contamination concerns, have impacted discretionary spending, such as dining out, according to the survey.

KEY QUOTE

"The methanol poisoning cases spread panic among consumers and caused a drop in activity at some establishments," Abrasel head Paulo Solmucci said in a statement.

WHAT'S NEXT

To stabilize sales, the bar and restaurant industry will need to rebuild consumer confidence and adapt to ongoing economic challenges, including inflation and reduced disposable income.

(Reporting by Igor Sodre; Writing by Isabel Teles; Editing by Mark Porter)

((Isabel.Teles@thomsonreuters.com;))