| Summary : The y/y
growth in real retail sales was 3.9% in December, after 6% in November. This resulted in a
3.5% real growth for 2000 as a whole, significantly in excess of the 0.4% of 1999. Implications : Household consumption is growing at
a healthy and steady rate. It can be expected that this will continue during 2001 and
underpin the economy to a significant degree.
- Driving forces :
(a) Real disposable income growth was moderate last year, stronger in the first half, when
inflation was still low, but weaker in the second half, when rising petrol prices pushed
up inflation.
(b) It is also important to note that higher income groups fared the best while lower
income groups experienced significant downward pressures on their incomes, mainly because
food inflation rose sharply in the middle quarters.
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(c) The fact that interest rates declined to their lowest
levels since 1988, also helped the higher income groups.
(d) Consumer borrowing initially grew very modestly, but this growth rate did pick up
during the last few months of 2000.
- Sectoral patterns : In view of the course of the driving
forces and the fact that they benefited the higher income groups the most, it is no
surprise that semi-durables real growth rose from 0% in 1999 to 6.1% in 2000 and that the
real growth of durables more than doubled from 3.2% in 1999 to 7.5% in 2000. The growth of
non-durables improved a little from a pedestrian 0.3% in 1999 to 0.8% in 2000.
- During 2001 the patterns of growth will not change much, except that one would expect
non-durables to grow slightly faster. Lower income groups suffered from a high inflation
rate last year, due to high food inflation and the rising cost of paraffin used for
cooking purposes, but this will be reversed this year. Especially the abolition of VAT on
paraffin will help. The end result should be that semi-durables and durables will still
outperform non-durables, but not to the same extent as last year.
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