Greek retail sales plunged for a fourth consecutive year in 2012, dropping by more than a tenth and highlighting the pain public sector austerity is inflicting on household consumption.
Adjusted for inflation, sales dropped 12 percent, Greek statistics agency ELSTAT said on Thursday. Overall, ordinary consumers are buying a third less in stores than they were in
That collapse in private consumption has been at the heart of a six-year recession which is expected to have knocked around 24 percent off Greece’s national output by the end of this year.
Household spending accounts for about three quarters of the economy, the biggest share in any euro area country, but is bearing the brunt of mass unemployment, soaring taxes and plunging wages which have reduced real disposable income of almost a third since budget cuts began in 2010.
Thousands of shops and smaller retail companies have shut down and the collapse makes it harder for Athens to meet fiscal targets under its 240 billion-euro bailout. Consumption taxes dropped at an annual pace of 23 percent in January, compared with a projected 6.3 percent drop for the full year.
“The data is painting a rather grim picture about the state of the domestic consumer,” said EFG Eurobank economist Platon Monokroussos.
Economists expect falling consumption to remain a drag on the economy this year, despite a slight improvement in consumer confidence after Athens secured more bailout funds in December, at the price of more austerity.
But falling prices may ease some of the pain. Greece and its foreign lenders expect consumer prices to fall by 0.8 percent in 2013, the first year of deflation in decades.
Producer prices stopped rising in January for the first time in more than three years, ELSTAT said separately on Thursday. [Reuters]