Eurozone retail sales post biggest decline since April 2021. Retail sales in the eurozone fell in December by the biggest decline since April 2021, as households tightened their belts amid high inflation and rising interest rates. Retail sales in the countries that share the euro currency declined by 2.7 percent on the month, following a 1.2 percent increase in November and expectations for a 2.5 percent fall. Sales of food, drinks and tobacco led the decline with a 2.9 percent fall, while sales of non-food products followed by 2.6 percent. At the same time automotive fuel sales rose by 2.3 percent on the month. On the year, retail sales were 2.8 percent lower in December, following a 2.5 percent decline the month before. However, these disappointing the numbers are unlikely change the European Central Bank’s hawkish stance in pushing ahead with raising interest rates to control inflation.
Fed Chair Powell says inflation is starting to ease, but interest rates still likely to rise. In attempting to explain last week's unexpectedly sanguine jobs report for January, the Federal Reserve Chair, Jerome Powell, on Tuesday repeated his position from the previous week’s policy meeting in which the central bank raised interest rates by a quarter of a percentage point. Mr Powell essentially reiterated that another couple of interest rate hikes were probably needed to bring inflation down, as the outcome is still seen as uncertain. A government report on February 3 showed that job hiring accelerated in January was “certainly strong—stronger than anyone I know expected,” Mr. Powell said last Tuesday during a moderated discussion before the Economic Club of Washington. He also stated that “The disinflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector, which is about a quarter of our economy. But it has a long way to go. These are the very early stages.”
Inflation-adjusted UK pay fell at fastest pace for over 20 years. Average inflation-adjusted pay in Britain fell at the fastest pace for more than two decades at the end of 2022, as public sector pay deals continue to lag the private sector during this inflation outburst. Average pay rose by 6.4 percent between September and November compared with the same period in 2021, figures published by the Office for National Statistics (ONS) showed. It is the fastest growth since 2001, excluding during the height of Covid-19. However, when adjusted for inflation, wages fell by 2.6 percent. The gap between public and private sector pay is also close to a record high. Private sector wages grew by 7.2 percent annually in the three months to November, which was more than double the 3.3 percent increase in the public sector. The ONS figures come as the government suffers mounting pressure to raise public sector pay amid rolling disputes, after teachers in England and Wales voted to strike and nurses prepare to take further action.
German industrial output plummets by most in nine months. German industrial production declined more than expected in December, slumping by 3.1 percent compared to the previous month, far weaker than the expected drop of 0.7 percent. This December number was driven by a sharp fall in output of intermediate goods, data published by German statistics agency, Destatis, showed on Tuesday. On an annual basis, industrial production was 0.6 percent lower than in 2021 and down by five percent from the pre-pandemic year of 2019. "This completes a miserable end to 2022 for Germany's economy, following the crash in retail sales and plunge in exports," Pantheon Macroeconomics' chief eurozone economist Claus Vistesen said.
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