Spain: Retail sales collapse in September
October 29, 2012
In September, retail sales plunged 12.6% over the same month last year, which marked a sharp deterioration compared to the revised 2.0% drop recorded in August (previously reported: -2.1% year-on-year). The figure marked, in fact, the largest drop on record, as the increase in the value added tax effective 1 September caused consumers to cut back on their purchases. In addition, the reading marks the 27th consecutive month of declining retail sales, as consumer spending remains depressed. The monthly contraction was broad-based, with all categories suffering sharp declines in annual terms. As a result of the sharp contraction, the trend is again pointing downwards, with annual average variation in retail sales falling from minus 5.7% in August to minus 6.3%. Negative growth in retail sales suggests that private consumption will continue to be a drag on economic activity going forward.