Inflation shrinks consumption and shops sell 40% less than in 2019


Retail sales fell 3.3% in July, according to INE data, and textile employers are forecasting a fall/winter season with store closures and job losses

In the past year, all purchases have become more expensive. Electricity, petrol and the shopping cart are 10.4% more expensive in August than in 2021, according to data published by the INE on Tuesday. But also clothing, despite the fact that companies do not fully pass on the large increase in costs they have to deal with on retail prices.

And higher prices imply lower consumption, which lowers retail sales. The latest data from the INE shows that sales in the month of July fell by 3.3% compared to the same period a year ago. On a monthly basis (July to June), the trade reduced its sales by 0.7%, the biggest drop since March, despite the fact that July was a month of sales and for this reason an increase in purchases was registered. Retail sales thus pile up for three consecutive months of monthly declines.

By sector, food sales fell 3.3% in July from a year ago, while sales of other products fell further, by 6.6%. The largest declines were recorded in small stores, with a decline of 9.5%, followed by large stores (-45), large stores (-1.5%) and small stores (-0.5%).

From the textile employer, Acotex, they explain to this newspaper that these data “confirm the bad situation of the textile trade”, where in July there was a big slowdown in purchases, despite it being the month of sales. The president, Eduardo Zamácola, assures that sales in the sector will remain 40% below that of 2019, before the pandemic broke out. And he predicts that the fall and winter will be “hugely complicated” due to a rise in costs from spending on raw materials, logistics and electricity. An increase in costs that is “very difficult to pass on to retail prices” because consumers are “unwilling to pay more for the same item of clothing than last year,” notes Zamácola.

July inflation figures – the latest sector data published by the INE – show that men’s clothing has risen in price by 6.6% compared to a year ago, women’s clothing by 5.2% and as a child 2.4%.

The textile employers’ chairman criticized the government-imposed energy-saving measures will be an “inconvenience” for consumers that will lead to lower spending, loss of business margins and thus business closures and job losses. For this reason, it is asking the government to take “effective measures that reactivate consumption so that the survival of trade is guaranteed.”

In fact, according to data published by the INE, employment started to slow down in July. The sector registered an annual employment increase of 2.4%, two tenths lower than in June.

Source: La Verdad


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