Eurozone: Retail sales and inflation point to recession

European Parliament. Committee on Economic and Monetary Affairs, ECON, Hearing. Dialogue on systemic risks in Europe. (EP Audiovisual Services).

European Parliament. Committee on Economic and Monetary Affairs, ECON. Hearing. Dialogue on systemic risks in Europe. (EP Audiovisual Services).

Retail sales in Eurozone point to recession, having lost in September a part of their volume. According to Eurostat, “In September 2013 compared with August 2013, “Food, drinks and tobacco” fell by 0.6% in the euro area and by 0.5% in the EU28. The non-food sector decreased by 0.1% in the euro area, but rose by 0.3% in the EU28”. Retail sales constitute an infallible witness of the juncture in the real economy, because they authentically mirror what happens not only in the consumption sphere but in the investments universe too. This is so because a large part of retail sales is directed to support new economic activities.

In any case, retail trade is tightly bonded with what happens in the world of consumption. Given that this part of GDP accounts to around two-thirds of the total, retail trade sales are early birds showing the way of the things to come. Invariably, GDP statistics are produced with a time lag of at least three months, while retail sales data usually appear with five weeks delay. That’s why, those who follow the short-term developments in an economy, show a great interest on retail sales.

Deflated sales

However, retail trade sales misery coupled with subdued inflation pressures are a rather alarming combination. It was not then by accident, that inflation lost more than one-third of its fading dynamic from September to October this year. Everybody was surprised to see that Eurozone’s inflation rate fell from 1.1% to 0.7% in the brief period of thirty days that is from one month to the next.

So alarmed were the decision makers that the Governing Council of the European Central Bank sidestepped the strong resistance of its two German members and decided to further cut down interest rates. In this way, last Thursday the entire world learned that the basic refinancing interest rate of the ECB was cut from 0.5% to 0.25%. This is like choosing the opposite direction from the Americans. The US Federal Reserve, known as the Fed, is contemplating quite the opposite policy, with interest rates increases and liquidity tidying.

Accurate predictions

This newspaper follows the retail sales developments very closely. On 7 August the European Sting writer Elias Lacon observed that “The latest data from this front are once more on the negative side. According to Eurostat, the EU statistical service, in June 2013 compared with May the volume of retail trade decreased by 0.5% in euro area and by 0.3% in EU27. With this in mind, the widespread opinion powered by some economic analysts, that Eurozone is about to exit from its long recession, must be treated with caution”.

Developments have justified Lacon completely. It was in this same line of thinking that the European Sting writer Dennis Kefalakos on 3 October wrote the following passage: “Draghi also clarified that the next reduction of interest rates is now closer. He revealed that the Governing Council was divided on that (keeping interest rate unchanged) yesterday, which is a clear sign that next month there might be a reduction of the rate to probably 0.25%, from 0.5% now”. The ECB did reduce its main interest rate last week to 0.25% from 0.5%. The driver of that was the fear that Eurozone may be returning to recession after a brief ‘growth’ period of three months. Actually, during the second quarter of this year the GDP increased by 0.3% after three consecutive years of recession and GDP losses.

There is no doubt that retail trade sales is a variable to be closely watched. Most of the time it points to the direction the GDP will follow. Not to forget that Mario Draghi the President of ECB has commented that the growth prospects of Eurozone appear “weak, fragmented and uncertain”.

 

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Changing healthcare systems with simple technological solutions

The financial sector cripples Eurozone growth prospects

Women must be at ‘centre of peacekeeping decision-making’, UN chief tells Security Council

Black babies more likely to survive when cared for by Black doctors, suggests new study

Ahead of key UN-backed Marrakech migration conference, youth recount harrowing journeys

Is your smart home as safe as you think?

Deal on faster exchange of non-EU nationals’ criminal records

Brussels terrorist attacks: Schengen in danger once again while leaders gather Europe’s multiple broken pieces

Space science now a ‘fundamental pillar’ of 21st century human development: top UN space official

It’s time to ‘eliminate the scourge of conflict-related sexual violence’, urges UN chief

Commission assesses and sets out reform priorities for the countries aiming to join the EU

UN-led Yemen ceasefire monitoring team gets ready to begin operations

Further reforms needed for a stronger and more inclusive Argentine economy

Germany tries to save Europe from war between Ukraine and Russia

EU leaders slammed on anti-tax evasion inaction and expensive energy

What’s an ‘essential service’? Not knowing could block access to key digital services during COVID

DiscoverEU: 15,000 travel passes up for grabs to explore the EU this summer

Artificial Intelligence raises ethical, policy challenges – UN expert

Brussels to tear down the trade wall with Mexico as opposed to Trump’s “walls”

The impact of COVID-19 pandemic on mental health

5 surprising ways digital technology is changing childhood

EU Youth Conference in Amsterdam: enabling young people to engage in a diverse, connected and inclusive Europe

CEOs as activists: should leaders speak up about social causes?

Alarming number of Ebola deaths in DRC a ‘rallying cry’ to scale up treatment

Three trends shaping the future of mobility in 2020

How Africa’s women can drive the 4IR forward

More attacks, ‘persisting security challenges’ threaten progress in West Africa, Sahel

EU-China: Council authorises signature of the agreement on geographical indications

COP21 Breaking News_03 December: Argentina Accepts KP Amendment

Remarks by H.E. Ambassador Zhang Ming At the Reception in Celebration of the 70th Anniversary of the Founding of the People’s Republic of China

‘I thought I’d never get out alive’ – the Muslim director who interviewed neo-Nazis

Dark spots on EU humanitarian aid spending

Want a fairer society? This economist says he has the answer

European Commission calls on national political parties to join efforts to ensure free and fair elections in Europe

Norway is known for its cold weather – but it’s been in the grip of a severe heatwave

UK must end ‘unlawful’ administration of Chagos Archipelago ‘as rapidly as possible,’ top UN court rules

We need better alignment between climate and trade. Here’s a roadmap

Using the quarantine to your advantage

ECB reaches the boundaries of its mandate to revive the entirety of Eurozone

Green Deal: measures to step up the fight against global deforestation

Tourism and transport: Commission’s guidance on how to safely resume travel and reboot Europe’s tourism in 2020 and beyond

Macron defends the idea of European sovereignty

At last some rules on banks

Vaccines: from miracle to possible danger

Iran: BBC and other broadcast journalists harassed; families threatened – UN experts

The European Commission, European Investment Bank and Breakthrough Energy Ventures establish a new €100 million fund to support clean energy investments

Coronavirus Response: Commission welcomes ‘Best Practices’ to provide relief for consumers and businesses

Better air pollution data is helping us all breathe easier. Here’s how

How a 3-point plan could help rebuild business for the long-term

Corruption undermines democracy and contributes to instability, warns senior UN anti-crime official

Close to final agreement on the EU Banking Union

5 charts that explain big challenges facing Italy’s new government

Take Care of In Order to Be Taken Care of

We’re all in the same boat on the SDGs. Here’s how we steer a course

Global aid needed for healthcare

European Commission: Does Apple, Starbucks and Fiat really pay their taxes?

Practicing healthcare: Skills of a good healthcare professional and its effects

How Sierra Leone is using 3D printing to become a model state

Coronavirus (COVID-19): Latest news from Monday’s World Health Organization briefing

Security Council gravely concerned by Ebola outbreak in DR Congo, demands immediate end to violence hampering response

More Stings?

Advertising

Comments

  1. I every time used to read piece of writing in news
    papers but now as I am a user of internet so from now I am using net for articles or reviews, thanks to web.

  2. certainly like your website however you have to test the spelling on several
    of your posts. Many of them are rife with spelling problems and I to find it very bothersome to inform
    the reality on the other hand I’ll certainly come again again.

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s