Monday, 7 July 2008

Consumer spending falls 2. 7% in May

No trend reversal in sight for 'dramatic' situation'
(ANSA) - Rome, July 4 - Consumer spending fell for the seventh month in a row in May, down 2.7% in volume compared to the same month last year, and there are no indications of a reversal in trend in the near future, the Confcommercio retailers' association reported on Friday.

The drop in May brought the average decline in consumer spending since the start of the year to 1.9%, compared to a rise of 1.1% in volume in the first five months of 2007.

According to Confcommercio, the May decline ''definitively erases any possibility of a trend reversal in the short term. The crisis is structural and profound and reinforces the forecast that economic growth this year will be next to zero''.

Because of their reduced purchasing power, Confcommercio observed, Italians are spending less on automobiles and on food, as well as on entertainment.

Due to a 5% hike in food prices, Confcommercio calculated that Italians Italians bought 3.3% less food, creating a situation which the Adusbef consumer group defined as ''truly dramatic''.

Confcommercio said Italians in May spent 13.5% less, compared to May 2007, on buying cars, motorbikes, fuel and plane tickets, while for the first five months of the year the reduction was 8.1%.

The decline in May for car sales was put at over 20% and 13% for motorbikes, while fuel sales were down 1%, indicating that Italians were increasingly leaving their cars in their garages.

For nonessential goods and services - which include entertainment and recreation - Italians cut spending by 4.9% in May and 5.1% for the first five months of the year.

The only area where Italians were still spending was for communications, which is also the only sector where prices continue to fall, but even here ''there are signs of a slowdown,'' Confcommercio said.

In a related development, the Coldiretti farmers' union reported on Friday that 44% of Italians last month never ate out at a pizzeria or restaurant and among those who did, 71% said they may not do so as frequently this month because of the need to tighten their belts.

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