Thursday, January 31, 2008

German Retail Sales Q4 2008

Retail sales in Germany unexpectedly fell for a third consecutive month in December as higher inflation continued to sap consumers' spending power.

According to provisional results of the Federal Statistical Office retail trade decreased in December 2007 a nominal 4.9% and a real 6.9% compared with the corresponding month of the previous year. The number of days open for sale was 24 in December 2007 and 24 in December 2006, too. Obviously there is a certain base effect here given the pre VAT increase in sales in December 2006, but still, the level is really shockingly low.

When adjusted for calendar and seasonal variations (CENSUS-X-12-ARIMA), the December 2007 turnover was in nominal terms 0.4% and in real terms 0.1 smaller than that of the preceding month.

In 2007 turnover in retail trade in Germany was in nominal terms 1.2% and in real terms 2.2% smaller than that of the previous year.

Sales, adjusted for inflation and seasonal swings, declined 0.1 percent from November, when they dropped 1.9 percent, the Federal Statistics Office in Wiesbaden said today. Germans seem to have maintained a rather discrete level of spending after inflation accelerated last year to the fastest pace since records began in 1996, driven by a higher sales tax and rising energy prices. Retail sales fell for a fourth month in January, the Bloomberg PMI showed yesterday.

Consumer prices rose 3 percent from a year earlier in January using a harmonized European Union method, the statistics office reported today. That's well above the European Central Bank's 2 percent limit on annual price gains.

Consumer spending appears to have been hit recent by fears about inflation – German retail sales fell by 1.8 per cent in the fourth quarter of last year, according to official figures. Employment data appeared to paint a more upbeat picture - German seasonally-adjusted unemployment fell by a sharper-than-expected 89,000 this month to the lowest level for 15 years - however unemployment trends have a well known tendency to lag behind other developments in economic activity.

Eurozone inflation has soared to a 14-year high of 3.2 per cent, adding to the European Central Bank’s case a hard-line stance on future interest rate moves.

The unexpected rise from 3.1 per cent in December suggests that the “hump” in inflation caused by higher energy and food prices will prove larger and longer-lasting than anticipated by the ECB. January’s rate was the highest since the Frankfurt-institution took responsibility for monetary policy in the region in 1999.

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