Eurozone retail sales plummeted in December, the largest drop in countries with the most restricted COVID policies


Retail sales in 19 European countries using the euro were much weaker than expected in December, with inflation surged to record highs in the region and the largest decline in retail sales in the same month, COVID-19. Concentrated on the toughest countries. measures.

Eurostat, the European Union’s statistical agency, reported on Friday that retail sales were down 3% month-on-month in December, with consensus forecasts showing a much more modest decline of 0.5%. On an annual basis, eurozone retail sales were up 2%, but are expected to grow 5.1%.

“Ugly, and service spending has certainly fallen further,” said Melanie De Bono’s senior European economist at Pantheon Macroeconomics. By tweet Comment on the downside surprises of retail sales.

There was an overall decline, but in the eurozone countries where COVID-19 measures were the most severe, the sharpest decline was seen.

“The decline in retail sales is not surprising as the impact of the fourth wave of coronavirus has grown negatively towards the end of the quarter,” said ING analysts. Said in a note.. “The countries with the most restrictive measures have seen the largest declines. Consider, for example, Germany and the Netherlands.”

As the Eurostat figures show, the Netherlands (-9.2%), Spain (-5.7%), Germany (-5.5%) and Denmark (-4.8%) led the decline on a monthly basis. ..

In some eurozone countries, retail sales increased month-on-month. That is, Latvia (7.2%), Slovenia (2.1%), Portugal (0.9%).

In the face of economic slowdown, many European countries have begun to relax COVID-19 restrictions in the hope that the wave of Omicron will weaken. Denmark took the lead among European Union member states by removing most restrictions on Tuesday, while France and the Netherlands moved to end or loosen the curb of COVID-19.

However, in Germany, where infectious diseases continue to set daily records, restrictions on personal gatherings and requirements for people to show evidence of vaccination or recovery and enter unwanted stores remain.

“The moment we feel we can relax responsibly, the federal and state governments will take that step,” said German government spokesman Stephen Hebestrite. “But at this point, it’s still a bit premature.”

Analysts generally hope that when the Omicron wave weakens and the restraints are removed, retail sales in the euro area will recover, but headwinds remain.

“We expect it to recover if the regulations are lifted, but we expect retail sales to be hit by soaring energy prices,” said an ING analyst. “Currently, wage growth remains so slow that real wages have been hit hard by rising inflation, which has blunted the outlook for household consumption.”

Consumer inflation in the euro area rose 5.1% year-on-year in December, primarily due to a 28.6% rise in energy prices. Still, without energy, prices were 2.8% higher than the previous year, reducing consumer purchasing power.

At a central bank meeting on Thursday, what some analysts described as the “hawkish point” of European Central Bank (ECB) Governor Christine Lagarde reflected the severe inflation rate in the euro area.

Lagarde acknowledged rising inflation risk and refused to repeat the previous guidance that the ECB’s rise in key interest rates this year is “very unlikely.”

Tom Ojimek

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Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communication, and adult education. The best writing advice he has ever heard is from Roy Peter Clarke.