Officials have given feedback on how healthy the eurozone economy is in the face of high interest rates and cost-of-living pressure.
France has reported a sharp decline in growth in the last quarter of the financial year. French GDP expanded by as little as 0.1% in Q3 of 2023. In the previous quarter, it recorded a 0.6% growth.
UK shop price inflation has been the lowest since August 2022, according to new data from the British Retail Consortium. This is good news for shoppers. At the same time, food inflation decelerated to 8.8% in October, the lowest since July last year.
According to The Guardian, shop price inflation continues to travel in the right direction. British Retail Consortium’s Helen Dickinson says: “Imported goods saw higher inflation levels due to a weaker pound, still-high producer costs and emerging trade frictions. Prices for some domestically produced foods, such as fruit, were lower compared to last month.”
Germany’s retail sales decline
Germany’s retail sales have dropped unexpectedly. Its retail sales fell by 0.8% month-on-month in September. This is in contrast to what economists expected, a 0.5% increase.
Chief economist at Oxford Economics, Oliver Rakau, says: “German retail sales are volatile and prone to revisions. But the trend towards Q4 remains downwards. It is hard to see GDP growth returning to positive territory at year-end. Real income-driven consumer rebound is nowhere to be seen.”
French finance minister Bruno Le Maire says he is pleased with the household spending in the last quarter. “The upturn in household growth is good news. It drove growth in the third quarter, proving that for the first time in many months, household income is rising faster than inflation.”
There is renewed hope that France will meet its 2024 economic growth target if inflation continues to ease. Its target is to grow the economy by 1.4% next year, Reuters reports.
Another impact on growth was that companies also reduced their stock inventories. However, domestic demand held up and made up for the losses. Household spending and company investments also contributed to the positive growth.
Slowdown likely to continue
According to senior economist Charlotte de Montpellier, the construction sector will likely see a slowdown in operations due to higher interest rates. This is having an increasing impact on demand and credit.
She says: “The dynamism of household consumption will also likely moderate over the coming months. While nominal wages have risen, allowing households to regain some purchasing power, the labor market is beginning to show the first signs of weakening, consumer confidence remains low, and inflation remains rather sticky.”
One cannot forget the recent rises in oil prices linked to the tensions in Russia and Ukraine, which will keep “energy inflation buoyant in France until the end of the year and into 2024.”
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