Europe’s retail sales slump to 13-year low in June quarter
European retail sales dropped by the most in at least 13 years in June as a surge in oil and food costs left consumers with less money to spend on other goods.
By Bloomberg |
LONDON: European retail sales dropped by the most in at least 13 years in June as a surge in oil and food costs left consumers with less money to spend on other goods.
Sales in the 15-nation euro area fell 3.1% from a year earlier, the largest annual decline since the European Union���s statistics office in Luxembourg began collecting the data in 1995. That was more than twice the 1.3% drop expected by economists, according to the median of 16 forecasts. From May, sales fell 0.6%. Higher oil and food costs are eroding households��� purchasing power across the region and crimping sales at Unilever, Beiersdorf and other consumer-products makers. European Central Bank President Jean-Claude Trichet, who last month raised interest rates to curb price increases, said July 18 that economic growth will endure a ���trough��� in the six months through September.
���We could possibly have negative growth in the third quarter. Household spending has been very weak,��� said James Shugg, an economist at Westpac Banking Corp. in London. ���We see the ECB cutting rates in the early part of next year.��� Sales of food products declined 4.4% in June from a year earlier, while non-food goods decreased 2.2%, the statistics office said in today���s report. From May, food sales fell 0.4% and non-food items dropped 0.6%.
Unilever, the world���s second-biggest consumer-products company, last week said net income dropped 20% in the quarter ended in June after price increases for products ranging from Magnum ice cream to Omo detergents hampered sales. Unilever, based in London and Rotterdam, said volume in Europe fell 2.9% in the second quarter.
Hamburg-based Beiersdorf, the maker of Nivea skin creams, today said sales growth slowed and its operating margin narrowed in the latest quarter. Weaker consumer spending in western Europe and the U.S. prompted L���Oreal, the world���s biggest cosmetics maker, to cut its sales forecast last month after reporting the smallest gain in more than three years.
Consumer-price inflation accelerated to 4.1% in July, the fastest pace in more than 16 years, as crude oil climbed to a record above $147 a barrel. The higher energy prices are pushing up raw-material costs and putting pressure on companies to pass along the increases to consumers.
Producer prices rose 8% in June, the most in at least 18 years, data released yesterday showed. A gauge of companies��� selling-price expectations rose to a 13-year high last month, the European Commission reported July 30.
The ECB raised its key interest rate to the highest in seven years last month on concerns consumer-price growth at twice the 2% limit will become embedded in the economy even as growth slows. The central bank has urged labour unions not to seek bigger pay raises to compensate for increased living expenses.
Sales in the 15-nation euro area fell 3.1% from a year earlier, the largest annual decline since the European Union���s statistics office in Luxembourg began collecting the data in 1995. That was more than twice the 1.3% drop expected by economists, according to the median of 16 forecasts. From May, sales fell 0.6%. Higher oil and food costs are eroding households��� purchasing power across the region and crimping sales at Unilever, Beiersdorf and other consumer-products makers. European Central Bank President Jean-Claude Trichet, who last month raised interest rates to curb price increases, said July 18 that economic growth will endure a ���trough��� in the six months through September.
���We could possibly have negative growth in the third quarter. Household spending has been very weak,��� said James Shugg, an economist at Westpac Banking Corp. in London. ���We see the ECB cutting rates in the early part of next year.��� Sales of food products declined 4.4% in June from a year earlier, while non-food goods decreased 2.2%, the statistics office said in today���s report. From May, food sales fell 0.4% and non-food items dropped 0.6%.
Unilever, the world���s second-biggest consumer-products company, last week said net income dropped 20% in the quarter ended in June after price increases for products ranging from Magnum ice cream to Omo detergents hampered sales. Unilever, based in London and Rotterdam, said volume in Europe fell 2.9% in the second quarter.
Hamburg-based Beiersdorf, the maker of Nivea skin creams, today said sales growth slowed and its operating margin narrowed in the latest quarter. Weaker consumer spending in western Europe and the U.S. prompted L���Oreal, the world���s biggest cosmetics maker, to cut its sales forecast last month after reporting the smallest gain in more than three years.
Consumer-price inflation accelerated to 4.1% in July, the fastest pace in more than 16 years, as crude oil climbed to a record above $147 a barrel. The higher energy prices are pushing up raw-material costs and putting pressure on companies to pass along the increases to consumers.
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Producer prices rose 8% in June, the most in at least 18 years, data released yesterday showed. A gauge of companies��� selling-price expectations rose to a 13-year high last month, the European Commission reported July 30.
The ECB raised its key interest rate to the highest in seven years last month on concerns consumer-price growth at twice the 2% limit will become embedded in the economy even as growth slows. The central bank has urged labour unions not to seek bigger pay raises to compensate for increased living expenses.
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