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Effects of crisis seen in Italy's Christmas spending

Consumer hit hard by two recessions

23 December, 19:22
Effects of crisis seen in Italy's Christmas spending (By Emily Backus) (ANSA) - Milan, December 23 - Italian Christmas spending has slumped 42.7% or 7.7 billion euros over six years and two recessions, the consumer group Codacons said Monday. Italian holiday spending in 2007, before the global financial crisis hit, was roughly 18 billion euros. In contrast, Italian Christmas spending is expected to reach 10.3 billion euros this December, Codacons said.

"The Christmas holidays represent the main purchasing opportunity for families, generating enormous volumes of business in all sectors - food, travel, homes, cosmetics, culture, etc.," explained Codacons president Carlo Rienzi. "There has been a vertiginous collapse in Christmas consumption in Italy due to the economic crisis and progressive loss of purchasing power (among) citizens," Rienzi concluded. Still, credit card purchases grew 1.5% to 97 billion euros in the frugal run-up to Christmas, the research centre of Italian credit card operations handler CartaSi revealed Monday. After leaving out expenses like school tuition, services and cash advances, discretionary purchases rose 0.8% during the six weeks examined, from November 4 to December 15, the Osservatorio Acquisti CartaSi said.

Far fewer consumers seemed willing to brave shopping crowds and queues, instead shopping from home as online buying rose 23.3%.

Charges for digital merchandise soared 37%, while clothing and food spending slumped 6.6% and 4.4% respectively. Household goods slipped 2.6%. Hotels and restaurants were down 3.1%. Trips and telecommunications were up by small single digits.

Still, Italian consumers may be leaving Christmas-related spending to the very last minute, as they did in the depths of recession in late last year.

The week of December 23, 2012, saw purchases rise 12.5% over the same period in 2011, after languishing in the weeks prior.

In the first two weeks of December this year, purchases fell 0.2% compared to the same period in 2012, making the Christmas week again crucial to holiday sales.

Meanwhile, a survey of Italian households reported budgets for this year's Christmas purchases average below 200 euros, retailers association Confesercenti said Monday.

Even the arrival of an extra month's salary in December, a customary provision for Italian workers, failed to boost consumption, the association found.

"In the majority of regions, the arrival of the 13th month (payment) has not changed families' inclinations. In short, there wasn't the awaited push toward consumption, in part because those resources were already committed to face other expenses like end-of-year payments," Confesercenti said in a statement.

Holiday sales were down 10%-20% in a number of regions, tumbling 15-20% in the Marche, 10-15% in Lombardy, and 10% in Tuscany, it said.

Spending was actually up 7% in three provinces of southern Italy's Campania region - Naples, Salerno and Caserta.

Holiday gift budgets for households fell below 100 euros in the Marche and Puglia regions, Confesercenti said.

In Piedmont, a third of consumers spent under 100 euros for gifts, while in Lombardy and Campania the average budget was 150 euros. In Liguria, Tuscany, Veneto and Lazio, gift budgets averaged 200 euros.

Italy is struggling to emerge from a double-dip recession. On the heels of the 2008-2009 crisis, another began in 2011, which was aggravated by austerity measures to avoid a Greek-like economic meltdown when interest rates on Italian bonds rose alarmingly high. Recession in Italy is just now beginning to show tentative signs of easing.

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