Consumer demand declined for nearly all items, including food and drink, during a full month of coronavirus lockdowns across the European Union. Sales in the 19 countries sharing the single currency fell by 11.7 percent in April from March and by 19.6 percent year-on-year, according to data from the EU statistics agency Eurostat.
The figures compared with market expectations of 15.0 percent and 22.3 percent declines respectively.
The month-on-month decline was the steepest in Eurostat data stretching back to currency’s introduction in 1999, going beyond March’s previous record 11.1 percent slump.
The year-on-year change, which before March had not been negative since the end of 2013, was the worst on record in data reaching back to 2000.
It was also four times the size of the decline in February 2009 – the worst month of the 2008-2009 financial crisis.
The only brighter spot was a sharp 10.9 percent month-on-month rise in mail order and internet shopping.
Even sales of food, drinks and tobacco and of pharmaceuticals and medical goods were down, although the former set was up year-on-year after large-scale stockpiling in March.
The sharpest sales declines were for automotive fuel and for clothing, footwear and textiles.
The steepest month-on-month falls by country were in Malta and Ireland, the latter after a slight increase in March.
Compared with the previous year, the biggest drops were in France and Spain. There was no April data for Cyprus, Greece and Italy.
Finland was the only country to register an increase, with sales going up 0.3 percent from March.
The fourth consecutive monthly drop in the headline inflation rate will increase the pressure on the ECB to stop the region sliding into deflation.
Economists have predicted the eurozone will fall into the feared territory this year despite the huge stimulus efforts of EU central bankers.
Deflation happens when prices keep chasing each other lower and can be difficult to stop, triggering a vicious downward spiral that can quickly paralyse the economy as investment dries up, companies fail and unemployment soars.
The data from Eurostat showed Belgium, Ireland, Greece, Spain, Italy and Portugal all suffered deflation in May while prices rose in the more resilient economies of Germany, France and the Netherlands.
Jessica Hinds, European economist at Capital Economics, said: “The further fall in eurozone inflation in May took the headline rate to within a whisker of zero and downward pressure on prices is set to persist while demand remains weak and unemployment rises.”
Published at Thu, 04 Jun 2020 13:44:00 +0000